On 5/2/20, Anna Company purchased $100,000 of the 9%, 10-year bonds of Dexter Corporation for $106,247,...

On 5/2/20, Anna Company purchased $100,000 of the 9%, 10-year bonds of Dexter Corporation for $106,247, which provides an 8% return on annual interest payments made every 5/ Anna does not intend to hold the bonds until maturity, but will hold them for longer than a year. The market value of the bonds at 12/31/20 is $106,100 and at 12/31/21 is $106,000. On 3/1/22, Anna sells the bonds for $105,950. What journal entries will Anna make in 2020 and 2021 to appropriately record these transactions and to report this investment on the year-end financial statements and on 3/1/22 to record the sale of the investment?

Solutions

Expert Solution

Answer:

Date	General Journal	Dr.	Cr.
5/2/2020	Available for sale securities	$ 106,247
	Cash		$ 106,247

12/31/2020	Unrealized gain/loss-other comprehensive income	147
	Available for sale securities		147

12/31/2021	Unrealized gain/loss-other comprehensive income	100
	Available for sale securities		100

3/1/2022	Cash	105,950
	Realized loss on available for sale securities	297
	Unrealized gain/loss-other comprehensive income		247
	Available for sale securities		106,000

ekkarill92 answered 6 months ago

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