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Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in...

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Accounting

Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price, and holds these investments in its trading portfolio. The companys fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lears trading account occurred during December 2024 and the first week of 2025.

December 17, 2024 Purchased 120 Grocers Supply Corporation bonds at par for $420,000.
December 28, 2024 Received interest of $2,800 from the Grocers Supply Corporation bonds.
December 31, 2024 Recorded any necessary adjusting entry relating to the Grocers Supply Corporation bonds. The market price of the bond was $4,000 per bond.
January 5, 2025 Sold the Grocers' Supply Corporation bonds for $450,000.

Required:

  1. Prepare the appropriate journal entry or entries for each transaction.
  2. Indicate any amounts that Rantzow-Lear Company would report in its 2024 balance sheet and income statement as a result of this investment. Ignore income taxes. including the retained earning part of it.

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