1) Describe the three different methods of recorded investments? 2) What is the journal entry to...

1) Describe the three different methods of recorded investments?

2) What is the journal entry to record a bond redeemed at a loss?

Solutions

Expert Solution

Ownership Investments

Ownership is what comes to mind for most people when the word investment is batted around. These are the most volatile and profitable class of investment. The following are examples

Stocks

Owning stock means owning a portion of a company. It may be a miniscule stake, but it's ownership.

Lending Investments

Lending money is a category of investing. The risks generally are lower than for many investments and, consequently, the rewards are relatively modest.

A bond issued by a company or a government will pay a set amount of interest over a set period of time. The only real risk is that the company or government will go bankrupt, in which case the bondholder may get little or none of the investment back.

Cash Equivalents

These are investments are "as good as cash," which means that they can be converted back to cash easily and quickly.

Money Market Funds

Money market funds are similar to savings accounts and can be purchased at any bank. The difference is that the investor commits to leaving the money alone for a period of time in return for a slightly higher rate of interest. The time period is as little as three months and no longer than a year.

Money market funds are more liquid than other investments, meaning you can write checks out of money market accounts just as you would with a checking account. Although, once you start writing checks on it you've erased much of its value as an investment.

When it is time to redeem the bonds, all premiums and discounts should have been amortized, so the entry is simply a debit to the bonds payable account and a credit to the cash account.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

How would the following transaction be recorded as a journal entry? Would it even be recorded?...

How would the following transaction be recorded as a journal entry? Would it even be recorded? Accurred expenses are recorded when they occur, but how does the fact that he hasn't written the reimbursement check affect the recording process? "JS had been using a personal cell phone during January for business activities. JS’s accountant had indicated that this was an allowable expense for the business, so JS planned to write a reimbursement cheque (to himself) for $95 but hadn’t gotten...

1. The journal entry to record sale of repurchased stock is: 2. Describe the impact of...

1. The journal entry to record sale of repurchased stock is: 2. Describe the impact of a treasury stock transaction on total shareholder’s equity. 3. Explain why companies issue stock splits ---- Using a textbook example, compare the line items in equity before and after a stock split: Before After Split Split Stockholders’ equity Paid-in capital Common stock, $10 par Paid-in capital in excess of par value Total paid-in capital Retained earnings Total stockholders’ equity Outstanding shares

What journal entry would be recorded if a company received a $12,000 payment from a customer...

What journal entry would be recorded if a company received a $12,000 payment from a customer for maintenance services to be provided over the next two months: Debit Cash, credit Unearned Revenue Debit Unearned Revenue, credit Cash. Debit Unearned Revenue, credit Sales Debit Cash, credit Revenue Payable. Debit Sales, credit Unearned Sales

1. The following journal entry was recorded by Epic Inc: Work in Process $94,000 Raw...

1. The following journal entry was recorded by Epic Inc: Work in Process $94,000 Raw Materials $94,000 Which of the following statements is correct regarding this journal entry? Multiple Choice This journal entry shows that $94,000 of raw materials were purchased during the period. This journal entry shows that $94,000 of products were sold. This journal entry shows that $94,000 of direct materials were called into the production process. This journal entry shows that $94,000 in products were completed...

Contingencies. There are three different approaches 1) recorded ( or recognizes) as a liability. 2) disclosed(in...

Contingencies. There are three different approaches 1) recorded ( or recognizes) as a liability. 2) disclosed(in the notes to the financial statement) 3)not recorded or disclosed. Scenario Batteries4U was a manufacturer of batteries, Portable lighting, and personal care products. Year 1(2009): it was identified as a "potentially responsible party" by a government environmental protection agency and told they might have to share in the cost of an environmental clean-up. Litigation was started. Batteries 4U though the probable outcome would be...

What are the different methods that can be used to evaluate capital investments? What are the...

What are the different methods that can be used to evaluate capital investments? What are the strengths and weaknesses of the various methods? Which method do you believe is the best? Why?

Adams, Inc. recorded the following journal entry on March 2, 2018. Cash 7,500 Unearned Revenue 7,500...

Adams, Inc. recorded the following journal entry on March 2, 2018. Cash 7,500 Unearned Revenue 7,500 From the journal entry above, identify the transaction on March 2, 2018. A. Adams sold goods for $7,500 cash. B. Adams received $7,500 for services to be performed in a later period. C. Adams paid $7,500 for services to be received at a later date. D. Adams purchased goods worth $7,500 and signed a one−year note for the same amount. A company has $110,000...

Post the following journal entry: Depreciation expense must be recorded for the month of December. The...

Post the following journal entry: Depreciation expense must be recorded for the month of December. The building was purchased with cash on February 1, 2014 for $150,000 with a remaining useful life of 30 years and a salvage value of $6,000. The method of depreciation for the building is straight-line. The equipment was purchased with cash on February 1, 2014 for $60,000 with a remaining useful life of 5 years and a salvage value of $3,000. The method of depreciation...

9.) What are the three important dates for a cash dividend? What is the journal entry...

9.) What are the three important dates for a cash dividend? What is the journal entry required for each date? What is the overall impact of a cash dividend on the accounting equation (assets = liabilities + stockholders' equity)? 10.) Calculate net cash provided by operating activities. 11.) Name the 3 major business activities and be able to identify which activities belong to each category. 12.) Prepare an Income Statement, Statement of Stockholders' Equity, Balance Sheet and Statement of Cash...

What is the journal entry and adj journal entry for this? Your company issued 1,000, 2.9%...

What is the journal entry and adj journal entry for this? Your company issued 1,000, 2.9% bonds (face value of each bond is $1,000) at 96.8229 on July 1st, 2019. The bonds are due on July 1, 2024, with interest payable each January 1 and July 1. The market rate at the time of the bond issuance was 3.6 Percent. Use the effective-interest method to calculate both the interest expense and the amortization of the bond discount when each interest...

Subjects