Complete (2) Accounting Problems ACC305 and a breakdown of how both problems are solved.

Exercise 17-5 (Part Level Submission) On January 1, 2013, Phantom Company acquires $341,400 of Spiderman Products, Inc., 8% bonds at a price of $324,420. The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 10.00% yield. The bonds are classified as held-to-maturity. (a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to 0 decimal places, e.g. 2,500.) Schedule of Interest Revenue and Bond Discount Amortization Straight-line Method Bond Purchased to Yield Cash Interest Bond Discount Carrying Amount Received Revenue Amortization of Bonds $ Date 1/1/13 $ 12/31/13 $ $ 12/31/14 12/31/15 (b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective interest method. (Round answers to 0 decimal places, e.g. 2,500.) Date 1/1/13 12/31/13 12/31/14 12/31/15 Schedule of Interest Revenue and Bond Discount Amortization Straight-line Method Bond Purchased to Yield Cash Interest Bond Discount Carrying Amount Received Revenue Amortization of Bonds $ $ $ $ (c) and (d) (c) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the straight-line method. (Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles/ Explanation Debit Credit December 31, 2014 (d) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the effective-interest method. (Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles/ Explanation Debit Credit December 31, 2014 Problem 17-5 Parnevik Company has the following securities in its investment portfolio on December 31, 2014 (all securities were purchased in 2014): (1) 3,110 shares of Anderson Co. common stock which cost $59,090, (2) 10,040 shares of Munter Ltd. common stock which cost $572,280, and (3) 6,460 shares of King Company preferred stock which cost $264,860. The Fair Value Adjustment account shows a credit of $10,880 at the end of 2014. In 2015, Parnevik completed the following securities transactions. 1. On January 15, sold 3,110 shares of Anderson's common stock at $23 per share less fees of $2,380. 2. On April 17, purchased 1,080 shares of Castle's common stock at $34 per share plus fees of $1,800. On December 31, 2015, the market prices per share of these securities were Munter $63, King $40, and Castle $22. In addition, the accounting supervisor of Parnevik told you that, even though all these securities have readily determinable fair values, Parnevik will not actively trade these securities because the top management intends to hold them for more than one year. (a) Prepare the entry for the security sale on January 15, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 15, 2015 (b) Prepare the journal entry to record the security purchase on April 17, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Apr. 17, 2015 (c) Compute the unrealized gains or losses. Unrealized $ Prepare the adjusting entry for Parnevik on December 31, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Dec. 31, 2015 Account Titles and Explanation Debit Credit \fE17-5 (Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2013, Phantom Company acquires $341,400 of Spiderman Products, Inc. 8% bonds at a price of $324,420 . The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 10% yield. The bonds are classified as held-to-maturity. Instructions: (a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. Schedule of Interest Revenue and Bond Discount Amortization Straight-line Method 8% Bond Purchased to Yield 10% Bond Carrying Cash Interest Discount Amount Date Received Revenue Amortization of Bonds Jan 1, 13 Dec 31, 13 Dec 31, 14 Dec 31, 15 27,312 27,312 27,312 32,972 32,972 32,972 5,660 5,660 5,660 324,420 330,080 335,740 341,400 (b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. Schedule of Interest Revenue and Bond Discount Amortization Effective Interest Method 8% Bond Purchased to Yield 10% Bond Carrying Cash Interest Discount Amount Date Received Revenue Amortization of Bonds Jan 1, 13 Dec 31, 13 Dec 31, 14 Dec 31, 15 27,312 27,312 27,312 32,442 32,955 33,519 5,130 5,643 6,207 324,420 329,550 335,193 341,400 (c) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the straight-line method. Dec 31, 14 Cash Debt Investment- Held to Maturity Intrest Revenue 27,312 5,660 32,972 (d) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the effective-interest method. Dec 31, 14 Cash Debt Investment- Held to Maturity Intrest Revenue 27,312 5,643 32,955 qattachments_9d2b88ac751ee1febf3640288f06fce5a87df397.xls, Exercise 17-5, Page 1 of 3, 10/12/2016, 21:30:36 P17-5Parnevik Company has the following securities in its investment portfolio on December 31, 2014 (all securities were purchased in 2014): 3,110 shares of Anderson Co. common stock which cost $59,090 10,040 shares of Munter Ltd. common stock which cost $572,280 6,460 shares of King Company preferred stock which cost $264,860 The Securities Fair Value Adjustment account shows a credit of $10,880 at the end of 2014. In 2015, Parnevik completed the following securities transactions. 1. On January 15, sold 3,110 shares of Anderson's common stock at $23 per share less fees of $2,380 2. On April 17, purchased 1,080 shares of Castle's common stock at $34.00 per share plus fees of $1,800 On December 31, 2015, the market values per share of these securities were: Munter Ltd. $63.00 King Co. $40.00 Castle Co. $22.00 In addition, the accounting supervisor of Parnevik told you that, even though all these securities have readily determinable fair values, Parnevik will not actively trade these securities because the top management intends to hold them for more than one year. Instructions: (a) Prepare the entry for the security sale on January 15, 2015. Selling price of shares Less: Fees Net income from shares Cost of the Shares Gain on Sale of Anderson's Shares Jan 15, 15 Cash Equity Investment Gain on Sale of Stock $71,530 2,380 69,150 59,090 $10,060 69,150 59,090 10,060 (b) Prepare the journal entry to record the security purchase on April 17, 2015. Total purchase price is: Number of Shares Cost per share Cost for shares Add: Fees Total cost of the shares Apr 17, 15 Equity Investment Cash 1,080 $34.00 36,720.00 1,800 $38,520 38,520 38,520 qattachments_9d2b88ac751ee1febf3640288f06fce5a87df397.xls, Problem 17-5, Page 2 of 3, 10/12/2016, 21:30:36 (c) Compute the unrealized gains or losses and prepare the adjusting entry for Parnevik on December 31, 2015. Available-for-Sale PortfolioDecember 31, 2015 Unrealized Fair Gain Securities Cost Value (Loss) Munter Ltd. $572,280 $632,520 King Co. 264,860 258,400 Castle Co. 38,520 23,760 Total of portfolio $875,660 $914,680 Previous securities fair value adjustment balanceCr. Securities fair value adjustmentDr. Dec 31, 15 Fair Value Adjustment (Available for Sale) Unrealized Holding Gain or Loss- Equity Unrealized Holding Gain or Loss- Equity $60,240 (6,460) (14,760) 39,020 10,880 $49,900 49,900 49,900 49,900 qattachments_9d2b88ac751ee1febf3640288f06fce5a87df397.xls, Problem 17-5, Page 3 of 3, 10/12/2016, 21:30:37 \fE17-5 (Effective-Interest versus Straight-Line Bond Amortization) On January 1, 2013, Phantom Company acquires $341,400 of Spiderman Products, Inc. 8% bonds at a price of $324,420 . The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 10% yield. The bonds are classified as held-to-maturity. Instructions: (a) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. Schedule of Interest Revenue and Bond Discount Amortization Straight-line Method 8% Bond Purchased to Yield 10% Bond Carrying Cash Interest Discount Amount Date Received Revenue Amortization of Bonds Jan 1, 13 Dec 31, 13 Dec 31, 14 Dec 31, 15 27,312 27,312 27,312 32,972 32,972 32,972 5,660 5,660 5,660 324,420 330,080 335,740 341,400 (b) Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. Schedule of Interest Revenue and Bond Discount Amortization Effective Interest Method 8% Bond Purchased to Yield 10% Bond Carrying Cash Interest Discount Amount Date Received Revenue Amortization of Bonds Jan 1, 13 Dec 31, 13 Dec 31, 14 Dec 31, 15 27,312 27,312 27,312 32,442 32,955 33,519 5,130 5,643 6,207 324,420 329,550 335,193 341,400 (c) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the straight-line method. Dec 31, 14 Cash Debt Investment- Held to Maturity Intrest Revenue 27,312 5,660 32,972 (d) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the effective-interest method. Dec 31, 14 Cash Debt Investment- Held to Maturity Intrest Revenue 27,312 5,643 32,955 qattachments_9d2b88ac751ee1febf3640288f06fce5a87df397.xls, Exercise 17-5, Page 1 of 3, 10/12/2016, 21:30:36 P17-5Parnevik Company has the following securities in its investment portfolio on December 31, 2014 (all securities were purchased in 2014): 3,110 shares of Anderson Co. common stock which cost $59,090 10,040 shares of Munter Ltd. common stock which cost $572,280 6,460 shares of King Company preferred stock which cost $264,860 The Securities Fair Value Adjustment account shows a credit of $10,880 at the end of 2014. In 2015, Parnevik completed the following securities transactions. 1. On January 15, sold 3,110 shares of Anderson's common stock at $23 per share less fees of $2,380 2. On April 17, purchased 1,080 shares of Castle's common stock at $34.00 per share plus fees of $1,800 On December 31, 2015, the market values per share of these securities were: Munter Ltd. $63.00 King Co. $40.00 Castle Co. $22.00 In addition, the accounting supervisor of Parnevik told you that, even though all these securities have readily determinable fair values, Parnevik will not actively trade these securities because the top management intends to hold them for more than one year. Instructions: (a) Prepare the entry for the security sale on January 15, 2015. Selling price of shares Less: Fees Net income from shares Cost of the Shares Gain on Sale of Anderson's Shares Jan 15, 15 Cash Equity Investment Gain on Sale of Stock $71,530 2,380 69,150 59,090 $10,060 69,150 59,090 10,060 (b) Prepare the journal entry to record the security purchase on April 17, 2015. Total purchase price is: Number of Shares Cost per share Cost for shares Add: Fees Total cost of the shares Apr 17, 15 Equity Investment Cash 1,080 $34.00 36,720.00 1,800 $38,520 38,520 38,520 qattachments_9d2b88ac751ee1febf3640288f06fce5a87df397.xls, Problem 17-5, Page 2 of 3, 10/12/2016, 21:30:36 (c) Compute the unrealized gains or losses and prepare the adjusting entry for Parnevik on December 31, 2015. Available-for-Sale PortfolioDecember 31, 2015 Unrealized Fair Gain Securities Cost Value (Loss) Munter Ltd. $572,280 $632,520 King Co. 264,860 258,400 Castle Co. 38,520 23,760 Total of portfolio $875,660 $914,680 Previous securities fair value adjustment balanceCr. Securities fair value adjustmentDr. Dec 31, 15 Fair Value Adjustment (Available for Sale) Unrealized Holding Gain or Loss- Equity Unrealized Holding Gain or Loss- Equity $60,240 (6,460) (14,760) 39,020 10,880 $49,900 49,900 49,900 49,900 qattachments_9d2b88ac751ee1febf3640288f06fce5a87df397.xls, Problem 17-5, Page 3 of 3, 10/12/2016, 21:30:37