Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer all of 4 questions in this picture, thank you P17.7 (LO 1, 4) (Debt Investment Entries) The following information relates to the debt

image text in transcribed

Please answer all of 4 questions in this picture, thank you

P17.7 (LO 1, 4) (Debt Investment Entries) The following information relates to the debt investments of Wildcat Welders. 1. On February 1, the company purchased 10\% bonds of Gibbons plc Interest is payable April 1 and October 1. 2. On April 1, semiannual interest is received. 3. On July 1, 9% bonds of Sampson, Inc. were purchased. These bonds with a par value of 200,000 were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1. 4. On September 1, bonds with a par value of 60,000, purchased on February 1, are sold at 99 plus accrued interest. 5. On October 1, semiannual interest is received. 6. On December 1, semiannual interest is received. 7. On December 31, the fair value of the bonds purchased February 1 and July 1 are 95 and 93 , respectively. Instructions a. Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these investments are managed to profit from changes in market interest rates. b. Indicate how the journal entries would change if Wildcat classified the investments as held-for-collection and selling. c. If Wildcat classified these as held-for-collection investments, explain how the journal entries would differ from those in part (a). d. Assume that Wildcat elects the fair value option for these investments under the part (b) conditions. Briefly discuss how the accounting would change

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

Students also viewed these Accounting questions