At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt...

60.1K

Verified Solution

Question

Accounting

At the end of 2018, Terry Company prepared the followingschedule of investments in available-for-sale debt securities:
Company
Amortized Cost
12/31/18 Fair Value
Cumulative Change in Fair Value
Morgan Company $30,000 $29,200 $(800)
Nance Company 50,000 53,200 3,200
Totals $80,000 $82,400 $2,400
During 2019, the following transactions occurred:
July 1 Purchased Oscar Company debt securities with a par value of100,000 for $98,000. The securities carry an annual interest rateof 10%, mature on July 1, 2024, and pay interest seminannually onJuly 1 and December 31. Terry uses the straight-line method toamortize any discounts or premiums.
Oct. 11 Sold all of the Morgan Company securities for $28,000 plusinterest of $1,400.
Dec. 31 Received interest of $6,000 on the Nance Company and OscarCompany debt securities, and the following yearend total marketvalues were available: Nance Company debt securities, $54,000;Oscar Company debt securities, $96,000.
Required:
1. Prepare journal entries to record the precedinginformation.
2. Show how the preceding items are reported on Terry’s December31, 2019, balance sheet. Assume all investments arenoncurrent.

Company	Amortized Cost	12/31/18 Fair Value	Cumulative Change in Fair Value
Morgan Company	$30,000	$29,200	$(800)
Nance Company	50,000	53,200	3,200
Totals	$80,000	$82,400	$2,400

Answer & Explanation Solved by verified expert

4.0 Ratings (801 Votes)

1 Journal Entries in the books of Terry company for the year ended 31122019 July 1 10 Oscar company debt securities Dr 100000 To Bank Ac 98000 To Discount on debt securities 2000 Being Oscar company debt securities See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

July 1	Purchased Oscar Company debt securities with a par value of100,000 for $98,000. The securities carry an annual interest rateof 10%, mature on July 1, 2024, and pay interest seminannually onJuly 1 and December 31. Terry uses the straight-line method toamortize any discounts or premiums.
Oct. 11	Sold all of the Morgan Company securities for $28,000 plusinterest of $1,400.
Dec. 31	Received interest of $6,000 on the Nance Company and OscarCompany debt securities, and the following yearend total marketvalues were available: Nance Company debt securities, $54,000;Oscar Company debt securities, $96,000.

1.	Prepare journal entries to record the precedinginformation.
2.	Show how the preceding items are reported on Terry’s December31, 2019, balance sheet. Assume all investments arenoncurrent.