Professional Simulation In this simulation, you are asked to address questions related to investments. Provide responses to
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Professional Simulation In this simulation, you are asked to address questions related to investments. Provide responses to all parts.
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KWW Professional Simulation Investments Time Remaining 3 hours 20 minutes Powerpuff Corp. carries an account in its general ledger called Investments, which contained the following debits for Investment purchases and no credits. Feb. 1, 2015 April 1 Blossom Company ordinary shares, 100 par, 200 shares 37,400 Government bonds, 11%, due April 1, 2025, Interest payable April 1 and October 1, 100 bonds of 1,000 par each 100,000 July 1 Buttercup Company 12% bonds, par 50,000, dated March 1, 2015, purchased at par plus accrued Interest, Interest payable annually on March 1, due March 1, 2035 52,000 (a) Assuming that Powerpuff's business model is to trade these investments to profit from price changes, prepare the journal entries necessary to classify the amounts into the proper accounts. (b) Prepare the entry to record the accrued Interest on December 31, 2015. Directions Situation Journal Entment The fair values of the securities on December 31, 2015, were: Blossom Company shares Government bonds Buttercup Company bonds 33,800 (1% Interest) 124,700 58,600 Use a computer spreadsheet to prepare a schedule indicating any fair value adjustment needed at December 31, 2015. Now assume Powerpuff's Investment in Blossom Company represents 30% of Blossom's shares. In 2015, Blossom declared and paid dividends of 9,000 (on September 30) and reported net Income of 30,000. Prepare a brief memorandum explaining how the accounting for the Blossom Investment will change, and discuss the Impact on the financial statements of Powerpuff Corp.
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Related Book For
Intermediate Accounting IFRS Edition
ISBN: 9781118443965
2nd Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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