Colah Company purchased 17 million of Jackson Inc 5 bonds at

Colah Company purchased $1.7 million of Jackson, Inc. 5% 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 Jackson bonds had a fair value of $1.97 million. Colah sold the Jackson bonds on July 1, 2019 for $1,530,000 a. The purchase of the Jackson bonds on July1 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 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 Answer is not complete. Complete this question by entering your answers in the tabs below Required 1 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 Net Income ocl Comprehensive 0 Income

Solution

1.Colah’s Journal Entry   (Amount in $)

Date

Particular

Debit

Credit

Purchase of Bonds

Jul 1, 2018

Investment In Bond

1,700,000

To Cash

1,700,000

Interest Received on Bonds

Dec 31, 2018

Cash

42,500

To Interest on Investment

42,500

Fair Value Adjustment of Bonds

Dec 31, 2018

Fair Value Adjustment in Investment

270,000

To Unrealised Gain

270,000

Interest received and due for first half

Jun 30, 2019

Cash

42,500

Prepaid Interest on Investment

42,500

To Interest on Investment

85,000

Bonds Sold

Jul 1, 2019

Cash

1530,000

Interest Income

     42,500

Loss on Sale of Investment

   440,000

To Investment

1,700,000

To Fair Value adjustment in Investment

270,000

To Prepaid Interest on Investment

     42,500

2.Colah’s Income statement                            (Amount in $)

Particular

2018

2019

Net Income

42,500

42,500

Other Comprehensive Income:

Add: Unrealised gain

2,70,000

Less: Loss on sale of Investment

-440,000

Comprehensive Income

312,500

-397,500

Date	Particular	Debit	Credit
	Purchase of Bonds
Jul 1, 2018	Investment In Bond	1,700,000
	To Cash		1,700,000
	Interest Received on Bonds
Dec 31, 2018	Cash	42,500
	To Interest on Investment		42,500
	Fair Value Adjustment of Bonds
Dec 31, 2018	Fair Value Adjustment in Investment	270,000
	To Unrealised Gain		270,000
	Interest received and due for first half
Jun 30, 2019	Cash	42,500
	Prepaid Interest on Investment	42,500
	To Interest on Investment		85,000
	Bonds Sold
Jul 1, 2019	Cash	1530,000
	Interest Income	42,500
	Loss on Sale of Investment	440,000
	To Investment		1,700,000
	To Fair Value adjustment in Investment		270,000
	To Prepaid Interest on Investment		42,500