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 2021 and the first week of 2022.
| 2021 | ||||
| Dec. | 17 | Purchased 150 Grocers Supply Corporation bonds at par for $525,000. | ||
| 28 | Received interest of $4,000 from the Grocers Supply Corporation bonds. | |||
| 31 | Recorded any necessary adjusting entry relating to the Grocers Supply Corporation bonds. The market price of the bond was $4,000 per bond. | |||
| 2022 | ||||
| Jan. | 5 | Sold the Grocers' Supply Corporation bonds for $562,500. |
Required: 1. Prepare the appropriate journal entry or entries for each transaction. 2. Indicate any amounts that Rantzow-Lear Company would report in its 2021 balance sheet and income statement as a result of this investment.
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Accounting For Non-Accounting Students
Authors: John R. Dyson, Ellie Franklin
9th Edition
978-1292128979, 1292128976
