Homework SourseI HAVE ONLY MISSED 2 ANSWERS THE LAST BOTTOM 2 ON LOWER RIGH
I HAVE ONLY MISSED 2 ANSWERS, THE LAST BOTTOM 2 ON LOWER RIGHT CORNER: EXPENSES & NET INCOME UNDER LOUDDER SELLS ALL BONDS.
I HAVE ALL ANSWERS CORRECT EXCEPT THE TWO ABOVE MENTIONED: SO FAR I HAVE TYPED IN UNDER EXPENSES: -150,000, 150,000, 48,000, 0, AND -48,000 AND ALL ARE WRONG
ON NET INCOME I HAVE TYPED IN: 0, -150,000, -48,000, 48,000, AND 150,000
Marketable Debt Securities
Use the financial statement effects template to record the accounts and amounts for the following four transactions involving investments in marketable debt securities classified as available-for-sale securities. Assume that these transactions occur in 2016 (before the new rules for securities went into effect).
a. Loudder Inc. purchases 6,000 bonds with a face value of $1,000 per bond. The bonds are purchased at par for cash and pay interest at a semi-annual rate of 4%.
b. Loudder receives semi-annual cash interest of $240,000.
c. Year-end fair value of the bonds is $978 per bond.
d. Shortly after year-end, Loudder sells all 6,000 bonds for $970 per bond.
Use negative signs with answers, if appropriate.
Answer
| Balance Sheet | Income Statement | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Noncash | Contrib. | Earned | |||||||||||||
| Transaction | Cash Asset | + | Assets | = | Liabilities | + | Captial | + | Capital | Revenues | - | Expenses | = | Net income | |
| Loudder purchases bonds. | Answer | Answer | Answer | Answer | Answer | Answer | Answer | Answer | |||||||
| Loudder receives cash interest. | Answer | Answer | Answer | Answer | Answer | Answer | Answer | Answer | |||||||
| Bonds year-end fair value is determined. | Answer | Answer | Answer | Answer | Answer | Answer | Answer | Answer | |||||||
| Loudder sells all bonds | Answer | Answer | Answer | Answer | Answer | Answer | Answer | Answer |
Solution
Balance Sheet
| Balance Sheet | Income Statement | |||||||||||||||||
| Noncash | Contrib. | Earned | ||||||||||||||||
| Transaction | Cash Asset | + | Assets | = | Liabilities | + | Captial | + | Capital | Revenues | - | Expenses | = | Net income | ||||
| Loudder purchases bonds | $ -60,00,000 | + | $ 60,00,000 | = | + | + | - | = | ||||||||||
| Loudder receives cash interest | $ 2,40,000 | + | = | + | + | $ 2,40,000 | - | = | $ 2,40,000 | |||||||||
| Bonds year-end fair value is determined. | + | $ -1,32,000 | = | + | + | $ -1,32,000 | - | = | ||||||||||
| Loudder sells all bonds | $ 58,20,000 | + | $ -58,68,000 | = | + | + | $ 1,32,000 | - | $ 1,80,000 | = | $ -1,80,000 | |||||||
