Problem 17-07 The following information relates to the debt securities investments of Martinez Company. 1. On February 1, the company purchased 12% bonds of Gibbons Co. having a par value of $315,600 at 100 plus accrued interest. 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 $212,400 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 $55,200, 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. (a) Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities. (Note to instructor: Some students may debit Interest Receivable at date of purchase instead of Interest Revenue. This procedure is correct, assuming that when the cash is received for the interest, an appropriate credit to Interest Receivable is recorded.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Account Titles and Explanation Credit Date Debit (1) Feb. 1 Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities. (Note to instructor: Some students may debit Interest Receivable at date of purchase instead of Interest Revenue. This procedure is correct, assuming that when the cash is received for the interest, an appropriate credit to Interest Receivable is recorded.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) bm No. Date Account Titles and Explanation Debit Credit (1) Feb. 1 np N (2) Feb. 1 Apr. 1 (3) Jul. 1 fad Sep 1 Oct. 1 Dec. 1 Dec. 31 (4) Sep. 1 CALCULATOR PRINTER VERSION BACK NEXT (4) Sep. 1 (7) > (To record interest.) (To record adjustment.) SHOW LIST OF ACCOUNTS List Of Accounts Problem 17-07 Accumulated Other Comprehensive Loss Allowance for Doubtful Accounts Allowance to Reduce Inventory to Market Bad Debt Expense Bonds Payable Cash Call Option Common Stock Cost of Goods Sold Debt Investments Dividend Revenue Dividend Receivable Equity Investments Fair Value Adjustment Futures Contract Gain on Sale of Investments Gain on Settlement of Call Option Gain on Settlement of Put Option Interest Expense > Allowance to Reduce Inventory to Market Bad Debt Expense Bonds Payable Cash Call Option Common Stock Cost of Goods Sold Debt Investments Dividend Revenue Dividend Receivable Equity Investments Fair Value Adjustment Futures Contract Gain on Sale of Investments Gain on Settlement of Call Option Gain on Settlement of Put Option Interest Expense Interest Receivable Interest Revenue Inventory Investment Income Loss on Impairment Loss on Sale of Investments Loss on Settlement of Call Option Loss on Settlement of Put Option No Entry Macwable Equity Investments Fair Value Adjustment Futures Contract Gain on Sale of Investments Gain on Settlement of Call Option Gain on Settlement of Put Option Interest Expense Interest Receivable Interest Revenue Inventory Investment Income Loss on Impairment Loss on Sale of Investments Loss on Settlement of Call Option Loss on Settlement of Put Option No Entry Notes Payable Paid-in Capital in Excess of Par - Common Stock Put Option Recovery of Loss from Impairment Retained Earnings Revenue from Investment Sales Revenue Swap Contract Unrealized Holding Gain or Loss - Equity Unrealized Holding Gain or Loss - Income
