Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Huang Hardware Inc. had the following transactions involving non-strategic investments during 2023 : 2023 Feb. 1 Paid $70,000 to buy a 60 -day term deposit,

image text in transcribedimage text in transcribed

Huang Hardware Inc. had the following transactions involving non-strategic investments during 2023 : 2023 Feb. 1 Paid $70,000 to buy a 60 -day term deposit, $70,000 principal amount, 6.23%, dated Feb. 1. 21 Purchased 6,000 common shares of Hilton Ltd. at \$11.25. Apr. 2 Received a cheque for the principal and accrued interest on the term deposit that matured today. 15 Purchased 8,200 common shares of Elder Corp. at $9.75. 20 Purchased 14,000 common shares of Venture Ltd. at $3.40. July 1 Purchased for $67,069 a 6.8%,$68,000 Barker Inc. bond that matures in four years when the market interest rate was 7.2%. Interest is paid semiannually beginning December 31, 2023. Huang Inc. plans to hold this investment until maturity. 15 Received a $0.30 per share cash dividend on the Hilton common shares. 28 Sold 4,000 of the Hilton common shares at \$11.15. Dec. 1 Received a $0.30 per share cash dividend on the remaining Hilton common shares owned. 31 Received the interest on the Barker bond. 31 The fair values of Huang Hardware Inc.'s investments on this date were Hilton shares, $12.60; Elder shares, \$10.30; Venture shares, $3.20. Assume the fair value and carrying value of the Barker bond were equal. 2024 Feb. 16 Sold the remaining Hilton shares at $12.65 less a transaction fee of $200. Required 1. Prepare an amortization schedule for the Barker bond showing only 2023 and 2024. 2. Prepare journal entries to record the preceding transactions. 3. Show how Huang Hardware Inc.'s investments will appear on its December 31, 2023, balance sheet. Analysis Component: Huang Hardware Inc. purchased the Barker Inc. bond for less than face value. Explain why. Huang Hardware Inc. had the following transactions involving non-strategic investments during 2023 : 2023 Feb. 1 Paid $70,000 to buy a 60 -day term deposit, $70,000 principal amount, 6.23%, dated Feb. 1. 21 Purchased 6,000 common shares of Hilton Ltd. at \$11.25. Apr. 2 Received a cheque for the principal and accrued interest on the term deposit that matured today. 15 Purchased 8,200 common shares of Elder Corp. at $9.75. 20 Purchased 14,000 common shares of Venture Ltd. at $3.40. July 1 Purchased for $67,069 a 6.8%,$68,000 Barker Inc. bond that matures in four years when the market interest rate was 7.2%. Interest is paid semiannually beginning December 31, 2023. Huang Inc. plans to hold this investment until maturity. 15 Received a $0.30 per share cash dividend on the Hilton common shares. 28 Sold 4,000 of the Hilton common shares at \$11.15. Dec. 1 Received a $0.30 per share cash dividend on the remaining Hilton common shares owned. 31 Received the interest on the Barker bond. 31 The fair values of Huang Hardware Inc.'s investments on this date were Hilton shares, $12.60; Elder shares, \$10.30; Venture shares, $3.20. Assume the fair value and carrying value of the Barker bond were equal. 2024 Feb. 16 Sold the remaining Hilton shares at $12.65 less a transaction fee of $200. Required 1. Prepare an amortization schedule for the Barker bond showing only 2023 and 2024. 2. Prepare journal entries to record the preceding transactions. 3. Show how Huang Hardware Inc.'s investments will appear on its December 31, 2023, balance sheet. Analysis Component: Huang Hardware Inc. purchased the Barker Inc. bond for less than face value. Explain why

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes

11th International Edition

1259094901, 9781259094903

More Books

Students also viewed these Finance questions

Question

What is management growth? What are its factors

Answered: 1 week ago