The following Givarz Corporation transactions are for bonds that were purchased as trading investments for the year ended December 31, 2012:
Feb. 1 Purchased $100,000 of Leslye Corporation 9% bonds at 104. Interest is received semi-annually on August 1 and February 1. The bonds mature on February 1, 2014.
Aug. 1 Received interest on Leslye bonds.
2 Sold $40,000 of the Leslye bonds at 102.
Dec. 31 Accrued interest on the remaining bonds.
31 The fair value of the remaining bonds was 100 on this date.
Instructions
(a) Record the above transactions, including required adjusting entries (if any).
(b) Show how the investments would be presented on the statement of financial position at December 31, 2012.
(c) Determine the balance in each of the income statement accounts that are affected in the transactions above and indicate how they would be presented on the income statement for the year ended December 31, 2012.