80.2K

Verified Solution

Link Copied!

1. The Janjua Company had the following account balances at 1/1/18: Common Stock $65,000 Treasury Stock (at cost) 13,400 Paid-in-Capital in Excess of Par 82,000 Investments in AFS Debt Securities 40,000 FVA (AFS) 2,500 credit Retained Earnings 22,000 On that date, the Accumulated OCI account was at its proper balance. There were no sales or purchases of Common Stock or Investments during 2018. Prior to any adjusting journal entries related to the investments, 2018 Net Income was $10,300. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/2018 was $38,500. Required: (a) Prepare the 12/31/18 journal entry to adjust the investment to fair value. (b) Prepare the complete 12/31/18 Equity section of the balance sheet. 2. The following information relates to the HTM debt securities investments of Kiran Company during 2018: a. February 1: The company purchased 10% bonds of Tempe Company having a par value of $150,000 at 98 plus accrued interest. Interest is payable January 1 and July 1. Maturity date is 1/1/20. b. July 1: Semiannual interest is received and amortization is updated for the Tempe bonds. c. December 31: Interest is accrued and amortization updated for the Tempe bonds. d. June 1: 9% bonds of Flagstaff were purchased. The bonds had a par value of $80,000 and were purchased at 103 plus accrued interest. Interest dates are January 1 and July 1. Maturity date is 1/1/20. e. July 1: Semiannual interest is received and amortization updated for the Flagstaff bonds. f. December 31: Interest is accrued and amortization updated for the Flagstaff bonds. 4/15/2020 2 Required: a) Prepare journal entries for all dates. Journal entries for the Tempe bonds (a, b, c) Journal Entries for the Flagstaff bonds (d, e, f). No explanations or supporting computations are required. Use straight-line amortization. Do NOT use separate accounts for discounts and premiums; instead, net them into the Investments account. When computing amortization, round the monthly amortization amounts to the nearest cent. However, journal entry amounts can be rounded to the nearest dollar.

Answer & Explanation Solved by verified expert

See Answer