Question
Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The
Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The companys fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lears trading account occurred during December 2024 and the first week of 2025.
| December 17, 2024 | Purchased 120 Grocers Supply Corporation bonds at par for $420,000. |
|---|---|
| December 28, 2024 | Received interest of $2,800 from the Grocers Supply Corporation bonds. |
| December 31, 2024 | Recorded any necessary adjusting entry relating to the Grocers Supply Corporation bonds. The market price of the bond was $4,000 per bond. |
| January 5, 2025 | Sold the Grocers' Supply Corporation bonds for $450,000. |
Required:
- Prepare the appropriate journal entry or entries for each transaction.
- Indicate any amounts that Rantzow-Lear Company would report in its 2024 balance sheet and income statement as a result of this investment. Ignore income taxes. including the retained earning part of it.
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Financial Accounting For MBAs
Authors: Peter D. Easton, John J. Wild, Robert F. Halsey, Mary Lea McAnally
6th Edition
161853100X, 978-1618531001
