Question
Debt investment The balance sheet caption used to report temporary or long-term investments in stocks or bonds held as either trading, available-for-sale, held-to-maturity, or equity
Debt investment
The balance sheet caption used to report temporary or long-term investments in stocks or bonds held as either trading, available-for-sale, held-to-maturity, or equity method securities.
transactions, available-for-sale valuation
Instructions
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Chart of Accounts
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Journal
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Instructions
Gaelic Industries Inc. is an athletic footware company that began operations on January 1, 2016. The following transactions relate to debt investments acquired by Gaelic Industries Inc., which has a fiscal year ending on December 31:
Record these transactions on page 10
2016 | ||
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May | 1 | Purchased $71,400 of Avery Co. 9%, 15-year bonds at their face amount plus accrued interest of $1,071. The bonds pay interest semiannually on March 1 and September 1. |
16 | Purchased $60,000 of Clawhammer 8%, 10-year bonds at their face amount plus accrued interest of $200. The bonds pay interest semiannually on May 1 and November 1. | |
Sept. | 1 | Received semiannual interest on the Avery Co. bonds. |
30 | Sold $26,400 of Avery Co. bonds at 97 plus accrued interest of $198. | |
Nov. | 1 | Received semiannual interest on the Clawhammer bonds. |
Dec. | 31 | Accrued $1,350 interest on the Avery Co. bonds. |
31 | Accrued $800 interest on the Clawhammer bonds. |
Record these transactions on page 11
2017 | ||
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Mar. | 1 | Received semiannual interest on the Avery Co. bonds. |
May | 1 | Received semiannual interest on the Clawhammer bonds. |
Required:
1. | Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places. |
2. | If the bond portfolio is classified as available for sale, what impact would this have on financial statement disclosure? |
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Chart of Accounts
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Journal
Shaded cells have feedback.
1. Journalize the entries to record the transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places.
How does grading work?
The grader is designed to give you the best score possible, even when you skip lines or enter them out of order. It does this by taking every line you have entered and comparing it to every line in the answer. When it finds the line that gives you the best score, it considers that a match.
PAGE 10PAGE 11
JOURNAL
Score: 313/331
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Solution
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