Question
Vilander Carecenters Inc. provides financing and capital to the healthcare industry, with a particular focus on nursing homes for the elderly. The following selected transactions
Vilander Carecenters Inc. provides financing and capital to the healthcare industry, with a particular focus on nursing homes for the elderly. The following selected transactions relate to bonds acquired as an investment by Vilander, whose fiscal year ends on December 31.
2017 | ||
Jan. 1 | Purchased at face value $1,628,500 of Javier Nursing Centers, Inc., 10-year, 10% bonds dated January 1, 2017, directly from Javier. | |
Dec. 31 | Accrual of interest at year-end on the Javier bonds. |
(Assume that all intervening transactions and adjustments have been properly recorded and that the number of bonds owned has not changed from December 31, 2017, to December 31, 2019.)
2020 | ||
Jan. 1 | Received the annual interest on the Javier bonds. | |
Jan. 1 | Sold $814,250 Javier bonds at 105. | |
Dec. 31 | Accrual of interest at year-end on the Javier bonds. |
a-Journalize the listed transactions for the years 2017 and 2020
b-Assume that the fair value of the bonds at December 31, 2017, was $1,791,350. These bonds are classified as available-for-sale securities. Prepare the adjusting entry to record these bonds at fair value.
c-Based on your analysis in part (b), show the balance sheet presentation of the bonds and interest receivable at December 31, 2017. Assume the investments are considered long-term.
d-Indicate the unrealized gain
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