Colah Company purchased 19 million of Jackson Inc 7 bonds at

Colah Company purchased $1.9 million of Jackson, Inc. 7% bonds at par on July 1, 2018, with interest paid semi-annually, when the bonds were acquired Colah decided to elect the fair value option for accounting for its investment. At December 31, 2018, the Jacksorn bonds had a fair value of $2.19 million. Colah sold the Jackson bonds on July 1, 2019 for $1,710,000. a. The purchase of the Jackson bonds on July 1. b. Interest revenue for the last half of 2018. c. Any year-end 2018 adjusting entries d. Interest revenue for the first half of 2019 e. Any entry or entries necessary upon sale of the Jackson bonds on July 1, 2019 15 Required: 1. Prepare Colah\'s journal entries for above transaction. 2. Fill out the following table to show the effect of the Jackson bonds on Colah\'s net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019 Complete this question by entering your answers in the tabs below. Required Required 2 Fill out the following table to show the effect of the Jackson bonds on Colah\'s net income, other comprehensive income, and comprehensive income for 2018, 2019, and cumulatively over 2018 and 2019. (Amounts to be deducted should be indicated with a minus sign.) 2018 2019 Total 66,500 133,000 $ 290,000$(190,000)100,000 Comprehensive Income356,500 (123,500)233,000 Net Income 66,500 $ OcI KRequired 1 Required 2

Solution

Solution 1:

Solution 2:

Journal Entries - Colah Company
Date	Particulars	Debit	Credit
1-Jul-18	Investment in Bond Dr	$1,900,000.00
	To Cash		$1,900,000.00
	(To record investment in bond)
31-Dec-18	Cash Dr ($1,900,000 * 7%*6/12)	$66,500.00
	To Interest Revenue		$66,500.00
	(Being interest received received)
31-Dec-18	Fair value adjustment Dr	$290,000.00
	To Unrealized holding gain or loss - OCI		$290,000.00
	(Being fair value adjustment of investment in jackson bond)
30-Jun-19	Cash Dr ($1,900,000 * 7%*6/12)	$10,150.00
	To Interest Revenue		$10,150.00
	(Being interest received received)
1-Jul-19	Cash Dr	$1,710,000.00
	Unrealized holding gain or loss - OCI	$290,000.00
	Loss on sale of bond	$190,000.00
	To Investment in bond		$1,900,000.00
	To Fair value adjustment		$290,000.00
	(To record sale of bond)