Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tan Company purchased $2,500,000 of Michelle, Inc., 5% bonds at par on July 1, 2021, with interest paid semi-annually. Tan determined that it should account

image text in transcribed
image text in transcribed
image text in transcribed
Tan Company purchased $2,500,000 of Michelle, Inc., 5% bonds at par on July 1, 2021, with interest paid semi-annually. Tan determined that it should account for the bonds as an available-for-sale investment. At December 31, 2021, the Michelle bonds had a fair value of $2,850,000. Tan sold the Michelle bonds on July 1, 2022 for $2,250,000. Required: 1. Prepare Tan's journal entries for the following transactions: a. The purchase of the Michelle bonds on July 1 b. Interest revenue for the last half of 2021. c. Any year-end 2021 adjusting entries. d. Interest revenue for the first half of 2022. e. Any entries necessary upon sale of the Michelle bonds on July 1, 2022, including updating the fair value adjustment, recording any reclassification adjustment, and recording the sale. 2. Complete the following table to show the effect of the Michelle bonds on Tan's net income, other comprehensive Income, and comprehensive income for 2021, 2022, and cumulatively over 2021 and 2022. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare Tan's journal entries for above transactions. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answer in whole dollars, not in millions.) View transaction list Required 1 Required 2 Prepare Tan's journal entries for above transactions. (If no entry is required for a transaction/event, select "No journal entry required" In the first account field. Enter your answer in whole dollars, not in millions.) View transaction list 1 Record the purchase of the Jackson bonds on July 1. . 2 Record the interiyt revenue for the last half of 2021. Record the entry to adjust to fair value at year end. 4 Record the interest revenue for the first half of 2022. Credit Record the entry to adjust to fair value on the date of sale. Record the entry for reclassification adjustment. 7 Record the sale of the Jackson bonds on July 1, 2022. Note: - Journal entry has been entered Complete this question by entering your answers in the tabs below. Required 1 Required 2 Fill out the following table to show the effect of the Michelle bonds on Tan's net income, other comprehensive income, and comprehensive income for 2021, 2022, and cumulatively over 2021 and 2022. (Negative amounts should be entered with minus sign. Enter your answer in whole dollars, not in millions.) 2022 Total Net Income OCI Comprehensive Income

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

Financial Statement Analysis And Earnings Forecasting In Accounting

Authors: Steven J Monahan

1st Edition

1680834509, 978-1680834505

More Books

Students also viewed these Accounting questions