Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 180 Grocers Supply Corporation bonds at par for $450,000.
28 Received interest of $5,200 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 $3,000 per bond.
2022
Jan. 5 Sold the Grocers' Supply Corporation bonds for $513,000.

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.

1. The list of each transaction:

(a) December 17, 2021 - Purchased 180 Grocers' Supply Corporation bonds at par for $450,000.

(b) December 28, 2021 - Received interest of $5,200 from the Grocers' Supply Corporation bonds.

(c) December 31, 2021 - Record any necessary adjusting entry relating to the Grocers' Supply Corporation bonds on December 31. The market price of the bonds was $3,000 per bond

(d) January 5, 2022 - Record the entry to adjust fair value of the investment on date of sale.

(e) January 5, 2022 - Sold the Grocers' Supply Corporation bonds for $513,000.

2.

Balance Sheet
December 31, 2021
Current Assets:
Income Statement:

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

Recommended Textbook for

Fraud Auditing And Forensic Accounting

Authors: Tommie W Singleton, Aaron J Singleton, G Jack Bologna, Robert J Lindquist

4th Edition

ISBN: 047056413X, 9780470564134

More Books

Students also viewed these Accounting questions