On June 1, 2019, Hansen Company purchased ten $1,000 Francisco Company bonds at par and classified them as held-to-maturity. In 2020, Francisco experienced financial difficulties and on Dec 31, 2020, based on an evaluation of the investment, Hansen determined that expected credit losses are $4,000. In 2021, Francisco improved its financial condition, and, on Dec 31, 2021, Hansen believed that expected credit losses would only be $2,000.

Required:

Prepare the journal entries for Hansen to record the above events under U.S. GAAP.

YEAR 2019 YEAR 2020 YEAR 2021

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

CHART OF ACCOUNTS

Hansen Company

General Ledger

	ASSETS
111	Cash
113	Investment in Trading Securities
114	Investment in Available-for-Sale Securities
119	Allowance for Change in Fair Value of Investment
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation
191	Investment in Held-to-Maturity Debt Securities
192	Allowance for Credit Losses

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
431	Interest Income
441	Gain on Transfer of Investment

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense
912	Unrealized Holding Gain/Loss
914	Loss on Impairment
915	Credit Loss Expense PAGE 2019PAGE 2020PAGE 2021 GENERAL JOURNAL