Show:
Bond Financing
Bond Investments
Equity Investments
Available for Sale Securities
Trading
Investments
100
Describe the following journal entry: Debit Cash 1,570,000 Credit Bonds Payable 1,550,000 Credit Bond Premium 20,000
What is the issuance of a bond for a premium of $20,000? (occurs when the contract rate on the bond is greater than the market rate at the time of issuance)
100
Describe the following journal entry: Debit Bond Investment 99,500 Credit Cash 99,500
What is the entry to record the purchase of a bond as an investment?
100
On 2/1 this is the entry required to record the purchase of 1,000 common shares of stock in Denver Corp who has a total of 20,000 shares outstanding assuming the stock was purchased for $25/share plus a broker commission of $200.
What is 2/1 Debit Investment in Denver Corp 25,200 Credit Cash 25,200
100
This could be a definition of Available for Sale Securities.
What are debt or equity securities not classified as Trading or Held to Maturity investments?
100
Trading Investments are reported in this section of a company's financial statements.
What is the current asset section?
200
Define 97% or $970,000
What is the issuance of $1,000,000 worth of bonds at a discount of $30,000? (occurs when the contract rate on the bonds is less than the market rate at the time of issuance)
200
Describe the following journal entry: Debit Interest Receivable 10,000 Credit Interest Revenue 10,000
What is the entry to record interest earned but not yet received?
200
On 7/15, this entry would record the sale of 200 shares of Denver Corp for $20 per share less broker commission of $100. Details of the original purchase are: bought 1,000 shares at $25 (a total of 25,000 are outstanding) plus a broker fee of $200 was paid.
What is Debit Cash 3, 900 Debit Loss on Sale of Inv in Denver Corp 1,140 Credit Inv in Denver Corp 5,040
200
This is an asset account that when paired with Available for Sale Investments will reflect the fair value of the securities held.
What is the Valuation Allowance for Available for Sale Securities?
200
This is a company's intent for investing in Trading Investments.
What is to earn short term profits from changes in market prices?
300
Describe the following entry: Debit Interest Expense 20,000 Credit Bond Discount 20,000
What is amortizing a bond discount?
300
Describe the following journal entry: Debit Bond Investment 90,000 Debit Interest Receivable 1,050 Credit Cash 91,050
What is the entry made when the purchase price of a bond includes accrued interest?
300
Originally 1,000 shares of Denver Corp stock were purchased. Subsequently 200 shares were sold. Now, on 11/1 the following journal entry was made: Debit Cash 1,000 Credit Dividend Revenue 1,000 Journal entry description: To record dividends paid by Denver Corp. Determine the amount of dividends Denver Corp declared and paid per share of common stock.
What is $1.25 per share?
300
Both the Valuation Allowance for Available for Sale Securities and any Unrealized Gain or Loss on Available for Sale Securities are reported on this financial statement.
What is the balance sheet?
300
This is an asset account that when paired with Trading Investments will reflect the fair value of the investments held.
What is Valuation Allowance for Trading Investments?
400
This entry lower the amount of interest expense that a company records on the income statement and also reduces the carrying amount of bonds payable.
What is amortizing a bond premium?
400
Describe the following journal entry: Debit Cash 5,000 Credit Interest Receivable 3,000 Credit Interest Revenue 2,000
What is recording the receipt of an interest payment on a bond investment where accrued interest has been received and interest earned during the period has been received?
400
On Sept 1st this records the purchase of 10,000 shares of CO Corp at $10 per share plus a $200 broker fee. CO Corp has 25,000 shares of stock outstanding.
What is 9/1 Debit Inv in CO Corp 100,200 Credit Cash 100,200
400
In contrast to changes in the fair value of Trading Investments, changes in the fair value of Available for Sale Securities does not have an impact on this important financial measurement.
What is net income?
400
This is the financial statement where any unrealized gain or loss on Trading Investments is reported.
What is the income statement?
500
Identify what is missing from the following journal entry: Debit Bonds Payable 100,000 Debit Bond Premium 5,000 Credit Cash 115,000
What is Loss on Redemption of Bonds for $10,000?
500
Describe the missing part of the following journal entry: Debit Cash 98,000 Credit Interest Revenue 2,000 Credit Bond Investment 100,000
What is Loss on the Sale of Bonds for $4,000?
500
On Sept 1st 10,000 shares of CO Corp were purchased at $10 per share plus a $200 broker fee. CO Corp has 25,000 shares of stock outstanding. On Dec 31st, CO Corp reported net income of $40,000 and on March 1st, CO Corp paid cash dividend of $.25 per share. These two entries are required to bring the books up to date.
What is 12/31 Inv in CO Corp 16,000 Inc of CO Corp 16,000 3/1 Cash 2,500 Inv in CO Corp 2,500
500
At the end of a company's fiscal year if the fair value of Available of Sale Securities is 10,000 and the cost is 12,000, assuming the Valuation Allowance for Available for Sale Securities has a debit balance of 5,000, this entry is required.
What is Debit Unrealized Loss on AFS Securities 7,000 Credit Valuation Allowance for AFS Securites 7,000
500
The following information relates to a company's Trading Investments. Cost = 25,000 Fair Value = 27,000 At FYE, the Valuation Allowance for Trading Investments has a 3,000 credit balance. This entry is required to correctly report the company's trading investments.
What is Debit Val Allowance for Trading Inv 5,000 Credit Unrealized Gain on Trading Inv 5,000