Question
Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The
Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2018 and the first week of 2019.
2018
Dec.17Purchased 170 Grocers' Supply Corporation bonds for $595,000.
28Received interest of $4,800 from the Grocers' Supply Corporation bonds.
31Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bonds were $4,000 per bond.
2019
Jan.5Sold the Grocers' Supply Corporation bonds for $646,000.
Required:
1.What are the appropriate journal entry or entries for each transaction?
2.What are any amounts that Rantzow-Lear Company would report in its 2018 balance sheet and income statement as a result of this investment?
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