Questions
Recording Entries for AFS Debt Securities— Effective Interest Method On January 1, 2020, Jules Company purchased...

Recording Entries for AFS Debt Securities— Effective Interest Method

On January 1, 2020, Jules Company purchased for cash, $95,000 bonds (nineteen $5,000 bonds) of Android Corporation at a market rate of 6%. The bonds pay 6.5% interest, payable on a semiannual basis each June 30 and December 31, and mature on December 31, 2024. The bonds are classified as available-for-sale securities. The annual reporting period of Jules Company ends December 31. Assume the effective interest method of amortization of any discounts or premiums.

  • Amortization Schedule
  • Journal Entries for 2020
  • Financial Statement Presentation

b. Record the entry for the purchase of the bonds by Jules Company on January 1, 2020.

c. Record the entry for the receipt of interest on June 30, 2020.

d. Record the entry for the receipt of interest on December 31, 2020.

e. Record the adjusting entry on December 31, 2020, to adjust the debt investment to fair value. The fair value of the bonds on December 31, 2020, was $93,100.

Note: List multiple debits or credits (when applicable) in alphabetical order.

Note: Round each amount to the nearest whole dollar.

Date Account Name Dr. Cr.
b. Jan. 1, 2020 AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
c. June 30, 2020 AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
d. Dec. 31, 2020 AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
e. Dec. 31, 2020 AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer
AnswerCashInterest ReceivableInvestment in TSFair Value Adjustment--TSInvestment in AFS SecuritiesFair Value Adjustment--AFSInvestment in HTM SecuritiesInvestment in StockFair Value Adjustment--Equity SecuritiesFair Value Adjustment--Fair Value OptionAllowance for Credit LossesAccumulated Other Comprehensive IncomeUnrealized Gain or Loss--OCIUnrealized Gain or Loss--IncomeDividend RevenueInterest RevenueInvestment IncomeLoss on ImpairmentRecovery of Loss on ImpairmentLoss on Sale of InvestmentGain on Sale of InvestmentN/A Answer Answer

In: Accounting

D4. Discuss whether internally generated intangible assets should be treated in the same way as acquired...

D4. Discuss whether internally generated intangible assets should be treated in the same way as acquired intangible assets.

In: Accounting

D4. Discuss whether internally generated intangible assets should be treated in the same way as acquired...

D4. Discuss whether internally generated intangible assets should be treated in the same way as acquired intangible assets.

In: Accounting

how to recognize and measure identifiable assets acquired and liabilities assumed in business combination ? Explain...

how to recognize and measure identifiable assets acquired and liabilities assumed in business combination ? Explain in around 1500 words

In: Accounting

How is KPC resistance acquired? What genetic elements does it have and what resistance mechanisms do...

How is KPC resistance acquired? What genetic elements does it have and what resistance mechanisms do these confer?

In: Biology

1.      Prepare general journal entries to record these transactions. (Explanations          are not required.) 2.      Posted...

1.      Prepare general journal entries to record these transactions. (Explanations
         are not required.)
2.      Posted the above items to the ledger T-accounts.
3.      Prepare a Trial Balance for Truman Services at May 31, 2020.
Truman Services organized and opened for business on May 1st. During the month
the company completed the following transactions:
On May 1, The company received an initial investment of $25,000 cash and $10,000 of
computer equipment for common stock.
On May 2, paid $600 cash for an insurance premium covering the next 12 months.
On May 3, paid $1,400 for May's rent.
On May 6, purchased office supplies for $1,500, on credit.
On May 7, The company made its first sale to a customer and collected $3,000 cash.
On May 15, company makes sale to a second customer for $8,000 and sends a bill.
On May 18, company paid $1,000 cash to partially satisfy item recorded on May 6.
On May 30, company paid $6,000 cash in salaries to staff.
On May 31, company paid a $1,000 cash dividend.

In: Accounting

On 1 June 2019, Sunshine Ltd purchased 50,000 shares in Tourism Ltd at a price of...

On 1 June 2019, Sunshine Ltd purchased 50,000 shares in Tourism Ltd at a price of $8 each. The transaction costs for the purchase are $4,000, paid in cash. On 31 May 2020 (Balance Date), the closing market price for a share in Tourism Ltd is $3. The Investment in Tourism Ltd is not held for trading.  

REQUIRED:

  1. Assuming Sunshine Ltd measures its share investments at “fair value through profit or loss”,  provide the journal entries to account for the investment in Tourism Ltd shares as required by NZ IAS 32 and NZ IFRS 9, and disclose the financial asset and related gain or loss on fair value on the financial statements for the year ending 31 May 2020.

  1. Assuming Sunshine Ltd has made the election to account for its share investments at “fair value through other comprehensive income”, provide the journal entries to account for the investment in Tourism Ltd shares as required by NZ IAS 32 and NZ IFRS 9, and disclose the financial asset and related gain or loss on fair value on the financial statements for the year ending 31 May 2020.

  1. In your own words, explain why the company may choose to account for its share investments at “fair value through other comprehensive income” over “fair value through profit or loss”. (Maximum words: 150).

In: Accounting

Skysong Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO...

Skysong Company began operations in 2019 and determined its ending inventory at cost and at lower-of-LIFO cost-or-market at December 31, 2019, and December 31, 2020. This information is presented below:

Cost

Lower-of-Cost-or-Market
12/31/19 $332,620 $312,620
12/31/20 375,420 359,540


(a) Prepare the journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market, and a perpetual inventory system (cost-of-goods-sold method) is used. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

12/31/19

12/31/20


(b) Prepare journal entries required at December 31, 2019, and December 31, 2020, assuming that the inventory is recorded at market under a perpetual system (loss method is used). (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

12/31/19

12/31/20


(c) Which of the two methods above provides the higher net income in each year?

Cost-of-goods sold method OR  Loss method OR Both methods have the same effect

In: Accounting

Exercise 10-07 Crane Furniture Company started construction of a combination office and warehouse building for its...

Exercise 10-07

Crane Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $14,000,000 on January 1, 2020. Crane expected to complete the building by December 31, 2020. Crane has the following debt obligations outstanding during the construction period.
Construction loan-12% interest, payable semiannually, issued December 31, 2019 $5,600,000
Short-term loan-10% interest, payable monthly, and principal payable at maturity on May 30, 2021 3,920,000
Long-term loan-11% interest, payable on January 1 of each year. Principal payable on January 1, 2024 2,800,000
Assume that Crane completed the office and warehouse building on December 31, 2020, as planned at a total cost of $14,560,000, and the weighted-average amount of accumulated expenditures was $10,080,000. Compute the avoidable interest on this project. (Use interest rates rounded to 2 decimal places, e.g. 7.58% for computational purposes and round final answers to 0 decimal places, e.g. 5,275.)
Avoidable Interest $
Compute the depreciation expense for the year ended December 31, 2021. Crane elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $840,000. (Round answer to 0 decimal places, e.g. 5,275.)
Depreciation Expense $

In: Accounting

On December 31, 2020, Bramble Company borrowed $60,888 from Paris Bank, signing a 5-year, $102,600 zero-interest-bearing...

On December 31, 2020, Bramble Company borrowed $60,888 from Paris Bank, signing a 5-year, $102,600 zero-interest-bearing note. The note was issued to yield 11% interest. Unfortunately, during 2022, Bramble began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $76,950 at maturity. The market rate of interest on loans of this nature is now 12%.

Prepare the entry to record the issuance of the loan by Paris Bank on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit
Dec. 31, 2020

List of Accounts

  

  

Prepare the entry, if any, to record the impairment of the loan on December 31, 2022, by Paris Bank. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit
Dec. 31, 2022

In: Accounting