Marketable Debt Securities

Use the financial statement effects template to record the accounts and amounts for the following four transactions involving investments in marketable debt securities classified as available-for-sale securities. Assume that these transactions occur in 2016 (before the new rules for securities went into effect).

a. Loudder Inc. purchases 6,000 bonds with a face value of $1,000 per bond. The bonds are purchased at par for cash and pay interest at a semi-annual rate of 4%.

b. Loudder receives semi-annual cash interest of $240,000.

c. Year-end fair value of the bonds is $978 per bond.

d. Shortly after year-end, Loudder sells all 6,000 bonds for $970 per bond.

Use negative signs with answers, if appropriate.