MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities during 2021. The company's fiscal year ends on December 31. No trading securities were held by MS on Jan 1, 2021. 2021 Jan 1) Purchased as $200,000 of 8% BA (Boeing) bonds, dated January 1, 2021, to hold as trading securities. The market rate was 7%. The bonds mature in 3 years. Interest is received semi-annually on June 30 and December 31. Jul 1) Purchased as $120,000 of 10% XOM (Exxon) bonds, dated July 1, 2021, to hold as trading securities. The market rate was 12%. The bonds mature in 5 years. Interest is received semi-annually on June 30 and December 31. Aug 3) Purchased 10,000 shares of MSFT (Microsoft) stocks for $250 per share 12) Purchased 10,000 shares of MSFT stocks for $280 per share 13) Received cash dividend $2,000 from MSFT. Sep 1) Purchased 10,000 shares of MSFT stocks for $300 per share 15) Sold 15,000 shares of MSFT stocks for $315 per share. Oct 1) Purchased 1,000 ares of TSLA (Tesla) stocks for $800 per share 2) Purchased 5,000 shares of TSLA stocks for $780 per share Nov 1) Sold 2,300 shares of TSLA stocks for $900 per share Dec 31) Market prices for trading securities are as follows: MSFT: $320 per share, TSLA: $980 per share, BA bonds: $210,000, XOM bonds: $110,000 Assume stocks are sold First-in, first-out. 2022 May 1) Sold 3,000 shares of TSLA stocks for $1,000 per share July 1) Sold BA bonds at $220,000 Aug 1) Sold 7,000 MSFT stocks for $350 per share Sep 1) Purchased 10,000 MSFT stocks for $320 per share Nov 1) Purchased 10,000 TSLA stocks for $1,100 per share Dec 31) Market prices for trading securities are as follows: MSFT: $375 per share, TSLA: $1,040 per share, XOM bonds: $127,000, Assume stocks are sold First-in, first-out (FIFO). (Answer in dollars. Ignore tax implications.) 1) Set up amortization tables for the bonds. 2) Fill in the following tables for each security (answer in $dollars). FVA, desired Balance Change to be made to FVA Amortized Cost Fair Value BA 12/31/2021 7/1/2022 FVA, desired Balance Change to be made to FVA Amortized Cost Fair Value XOM 12/31/2021 12/31/2022 FVA, desired Balance Change to be made to FVA COST Fair Value MSFT 12/31/2021 12/31/2022 FVA, desired Balance Change to be made to FVA COST Fair Value TSLA 12/31/2021 12/31/2022 3) Prepare journal entries for 2021-2022. 4) Re-make the above tables with the cost-basis assumption that stocks are sold Last-in, First-out (LIFO). 5) (only for presenting groups) Under which cost assumption (First-in, First-out vs. Last-in, First-out), MS's net income is higher in each year? 6) (only for presenting groups) If MS classifies stocks as available-for-sale securities while classifying bonds as trading securities, how MS's 2021 and 2022 net incomes would change from the net incomes in the original case above? Your answer would be along the line that "2021 net income becomes higher/lower by XX under FIFO and higher/lower by XX under LIFO. 2022 net income ...." MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities during 2021. The company's fiscal year ends on December 31. No trading securities were held by MS on Jan 1, 2021. 2021 Jan 1) Purchased as $200,000 of 8% BA (Boeing) bonds, dated January 1, 2021, to hold as trading securities. The market rate was 7%. The bonds mature in 3 years. Interest is received semi-annually on June 30 and December 31. Jul 1) Purchased as $120,000 of 10% XOM (Exxon) bonds, dated July 1, 2021, to hold as trading securities. The market rate was 12%. The bonds mature in 5 years. Interest is received semi-annually on June 30 and December 31. Aug 3) Purchased 10,000 shares of MSFT (Microsoft) stocks for $250 per share 12) Purchased 10,000 shares of MSFT stocks for $280 per share 13) Received cash dividend $2,000 from MSFT. Sep 1) Purchased 10,000 shares of MSFT stocks for $300 per share 15) Sold 15,000 shares of MSFT stocks for $315 per share. Oct 1) Purchased 1,000 ares of TSLA (Tesla) stocks for $800 per share 2) Purchased 5,000 shares of TSLA stocks for $780 per share Nov 1) Sold 2,300 shares of TSLA stocks for $900 per share Dec 31) Market prices for trading securities are as follows: MSFT: $320 per share, TSLA: $980 per share, BA bonds: $210,000, XOM bonds: $110,000 Assume stocks are sold First-in, first-out. 2022 May 1) Sold 3,000 shares of TSLA stocks for $1,000 per share July 1) Sold BA bonds at $220,000 Aug 1) Sold 7,000 MSFT stocks for $350 per share Sep 1) Purchased 10,000 MSFT stocks for $320 per share Nov 1) Purchased 10,000 TSLA stocks for $1,100 per share Dec 31) Market prices for trading securities are as follows: MSFT: $375 per share, TSLA: $1,040 per share, XOM bonds: $127,000, Assume stocks are sold First-in, first-out (FIFO). (Answer in dollars. Ignore tax implications.) 1) Set up amortization tables for the bonds. 2) Fill in the following tables for each security (answer in $dollars). FVA, desired Balance Change to be made to FVA Amortized Cost Fair Value BA 12/31/2021 7/1/2022 FVA, desired Balance Change to be made to FVA Amortized Cost Fair Value XOM 12/31/2021 12/31/2022 FVA, desired Balance Change to be made to FVA COST Fair Value MSFT 12/31/2021 12/31/2022 FVA, desired Balance Change to be made to FVA COST Fair Value TSLA 12/31/2021 12/31/2022 3) Prepare journal entries for 2021-2022. 4) Re-make the above tables with the cost-basis assumption that stocks are sold Last-in, First-out (LIFO). 5) (only for presenting groups) Under which cost assumption (First-in, First-out vs. Last-in, First-out), MS's net income is higher in each year? 6) (only for presenting groups) If MS classifies stocks as available-for-sale securities while classifying bonds as trading securities, how MS's 2021 and 2022 net incomes would change from the net incomes in the original case above? Your answer would be along the line that "2021 net income becomes higher/lower by XX under FIFO and higher/lower by XX under LIFO. 2022 net income