Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 1 5 points On December 31, 2021, Pearl Corporation holds debt investments in bonds of three companies Gold Company 10%, 1,500,000 par value bonds

image text in transcribed
Question 1 5 points On December 31, 2021, Pearl Corporation holds debt investments in bonds of three companies Gold Company 10%, 1,500,000 par value bonds to yield 11% Silver Company 8%, $900,000 par value bonds to yield 10% Moonlight Company 9% $1,000,000 par value bonds to yield 7% All the three investments in bonds mature January 1, 2025 and pay interest semiannually every July 1 and January 1, and all of them are held by Pearl Corporation for trading. The amortized costs for the three debt investments on December 31, 2021, were $1,436,532, $860,652, and $1,150,000 respectively if the fair values of all the bonds were $1,400,000 for Gold $800,000 for Silver and S1,175,000 for Moonlight, and the previous balance of unrealized gain or loss on December 31, 2020, was $10,692 Required: a) Compute the unrealized gain or loss on December 31, 2021 for each investment and for total and prepare the necessary adjusting entry b) Assume that Silver bonds are held-for-collection is there any adjustment needed and what is the adjusting entry if any ALTEN AITFN-F10 (Mac)

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