Exercise 12-3 Securities held-to-maturity [LO12-1]

FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&Ts investment activities during the last two months of 2018. At November 1, FF&T held $45 million of 20-year, 12% bonds of Convenience, Inc., purchased May 1, 2018, at face value. Management has the positive intent and ability to hold the bonds until maturity. FF&Ts fiscal year ends on December 31.

Nov.		1		Received semiannual interest of $2.7 million from the Convenience, Inc., bonds.
Dec.		1		Purchased 16% bonds of Facsimile Enterprises at their $30 million face value, to be held until they mature in 2024. Semiannual interest is payable May 31 and November 30.
		31		Purchased U.S. Treasury bills to be held until they mature in two months for $10.3 million.
		31		Recorded any necessary adjusting entry(s) relating to the investments.

The fair values of the investments at December 31 were:

Convenience bonds	$	42.3	million
Facsimile Enterprises bonds		30.7	million
U.S. Treasury bills		10.3	million

Required: Prepare the appropriate journal entry for each transaction or event. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)

Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question Exercise 12-3 Securities held-to-maturity (LO12-1 FF&T Corporation is a confectionery wholesaler that frequently buys and sells securities to meet various investment objectives. The following selected transactions relate to FF&T's investment activities during the last two months of 2018. At November 1, FF&T held $45 million of 20-year, 12% bonds of Convenience, Inc., purchased May 1, 2018, at face value. Management has the positive intent and ability to hold the bonds until maturity. FF&T's fiscal year ends on December 31 1 Received semiannual in te rest of $2.7 million from the Convenience, Inc., bonds. 1 Purchased 16% bonds of Facsimile Enterprises at their $30 million face value, to be held until they mature in 2024. Semiannual interest is payable May 31 and November 30. 31 Purchased U.S. Treasury bills to be held until they mature in two months for $10.3 million . 31 Recorded any necessary adjusting entry(s) relat ing to the investments. Nov. Dec. The fair values of the investments at December 31 were: $42.3 million 30.7 million 10.3 million Convenience bonds Facsimile Enterprises bonds U.S. Treasury bills Required: Prepare the appropriate journal entry for each transaction or event. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Answer is not complete. No Date General Journal Debit Credit Return to question Answer is not complete. No Date General Journal Debit Credit Cash 1 Nov 01 2.7 Interest revenue 2.7 Investment in Facsimile Enterprises bonds Dec 01 30.0 30.0 Cash 3 Dec 31 Investment in U.S. treasury bills 10.3 Cash 10.3 30.7X Interest receivable-Facsimile Enterprises bonds 4 Dec 31 30.7x Fair value adjustment-Noncredit loss 5 Dec 31 Investment revenue 0.9 ( 0 X Interest receivable-Facsimile Enterprises bonds 1x Fair value adjustment 5 of 12 Prev Next>