Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I am looking for chapter 13 exercises solutions, unfortunately, none of them are solved On December 31, 2018, Marsh Company held Xenon Company bonds in

I am looking for chapter 13 exercises solutions, unfortunately, none of them are solved

On December 31, 2018, Marsh Company held Xenon Company bonds in its portfolio of available-for-sale securities. The bonds have a par value of $15,000, carry a 10% annual interest rate, mature in 2025, and had originally been purchased at par. The market value of the bonds at December 31, 2018 was $13,000. The December 31, 2018, balance sheet showed the following:

Marsh Company

Partial Balance Sheet

December 31, 2018

1

Assets

2

Investment in Available-for-Sale Securities

$15,000.00

3

Less: Allowance for Change in Fair Value of Investment

(2,000.00)

4

13,000.00

5

Shareholders Equity:

6

Unrealized Holding Gain/Loss

$(2,000.00)

On January 1, 2019, Marsh acquired bonds of Yellow Company with a par value of $16,000 for $16,200. The Yellow Company bonds carry an annual interest rate of 12% and mature on December 31, 2023. Additionally, Marsh acquired Zebra Company bonds with a face value of 18,000 for $17,600. The Zebra Company bonds carry an 8% annual interest rate and mature on December 31, 2028. At the end of 2019, the respective market values of the bonds were: Xenon, $14,000; Yellow, $17,000; and Zebra, $20,000. Marsh classifies all of the debt securities as available-for-sale as it does not intend to hold them to maturity nor does it intend to actively buy and sell them. Assume that Marsh uses the straight-line method to amortize any discounts or premiums.

Required:

1. Prepare the journal entries necessary to record the purchase of the investments in 2019, the annual interest payments on December 31, 2019, and the adjusting entry needed on December 31, 2019.
2. What would Marsh disclose on its December 31, 2019, balance sheet related to these investments

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

ISE Fundamental Managerial Accounting Concepts

Authors: Thomas Edmonds, Christopher Edmonds, Mark Edmonds, Philip Olds

9th Edition

1260565483, 9781260565485

More Books

Students also viewed these Accounting questions

Question

What are some global issues confronting women?

Answered: 1 week ago