The following information relates to the debt securities investments of Kingbird Company. 1. On February 1,...

The following information relates to the debt securities investments of Kingbird Company.

1.		On February 1, the company purchased 11% bonds of Gibbons Co. having a par value of $310,800 at 100 plus accrued interest. Interest is payable April 1 and October 1.
2.		On April 1, semiannual interest is received.
3.		On July 1, 8% bonds of Sampson, Inc. were purchased. These bonds with a par value of $192,000 were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1.
4.		On September 1, bonds with a par value of $56,400, purchased on February 1, are sold at 98 plus accrued interest.
5.		On October 1, semiannual interest is received.
6.		On December 1, semiannual interest is received.
7.		On December 31, the fair value of the bonds purchased February 1 and July 1 are 94 and 92, respectively.

(a) Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are available-for-sale securities

Expert Solution

The Journal entries would be reported as follows :

Date	Particulars		Debit	Credit
01-Feb	Avaible for sale - securities		$ 310,800.00
	Interest revenue		$ 11,396.00		31080011%4/12
	Cash			$ 322,196.00


01-Apr	Cash		$ 17,094.00		31080011%6/12
	Interest revenue			$ 17,094.00


01-Jul	Avaible for sale - securities		$ 192,000.00
	Interest revenue		$ 1,280.00		1920008%1/12
	Cash			$ 193,280.00


01-Sep	Cash		$ 13,992.00		(310800-56400)11%6/12
	Interest revenue			$ 13,992.00


01-Dec	Cash		$ 7,680.00		1920008%6/12
	Interest revenue			$ 7,680.00


31-Dec	Interest receivable		$ 8,276.00		(310800-56400)11%3/12	1920008%1/12
	Interest revenue			$ 8,276.00


31-Dec	Unrealized holding gain or loss - Equity		$ 30,624.00
	Securities fair value adjustment (Available for sale)			$ 30,624.00


Available for sale portfolio :
	Cost	Market	Unrealized gain / (loss)
Gibbons	254400	239136	$ (15,264.00)
sampsoon	192000	176640	$ (15,360.00)

			$ (30,624.00)

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