Question
Requirement 1: In the space below each item a-g (or on a t-account sheet), record the 2016 transactions/events. Show any computations. a. On January 1,
Requirement 1: In the space below each item a-g (or on a t-account sheet), record the 2016 transactions/events. Show any computations.
a. On January 1, 2016, purchased $100,000 of GG Inc.s 8%, 10-year bonds for $87,538. The bonds pay interest semi-annually on June 30 and December 31 and were priced to yield the market rate of 10%. Toms intends to hold the bonds until maturity.
b. On March 30, 2016, sold Cranberry Co.s common stock for $49,000.
c. On June 30, 2016, received semi-annual interest payment on GG Inc.s, bonds. The effective interest method was used.
d. On July 1, 2016, received $10,000 in dividends from Yam Co.
e. On December 31, 2016, received semi-annual interest payment on GG Inc.s. bonds. The effective interest method was used
f. On December 31, 2016, Yam Co. reported 2016 net income of $120,000.
g. On December 31, 2016, recorded fair value adjustment(s), if any, for the investments. The fair values were:
Pumpkin Pie Co. shares $ 98,000 Yam Co. shares $830,000 GG Inc., bonds $78,000
The December 31, 2015, balance sheet of Tom's Turkey Farm reported the following amounts. Long-term investments $80,000 Investment in Pumpkin Pie Co.-AFS security Fair value adjustment 12,000 92,000 $40,000 Investment in Cranberry Co. AFS security Fair value adjustment 4,000 44,000 Investment in Yam Co.-equity affiliate 800,000 (40% of Yam's common stock)
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