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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

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. for the 2019, 2020, 2021 years

CHART OF ACCOUNT

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

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