A company invests $700,000 in corporate bonds in 2023 and classifies them as available for sale. At
Question:
A company invests $700,000 in corporate bonds in 2023 and classifies them as available for sale. At the end of 2023, the fair value of the securities is $650,000. In 2024, the company sells the bonds for $706,000. Which statement is true concerning the entry made to record the sale of the bonds in 2024?
a. Other comprehensive income increases by $50,000 and income increases by $6,000.
b. There is no effect on other comprehensive income, and income increases by $6,000.
c. Other comprehensive income declines by $50,000, and income increases by $6,000.
d. Other comprehensive income increases by $6,000, and there is no effect on income.
Prepare the entries to:
Recognize the purchase of the investment
Recognize the change in fair value at the end of 2023
Recognize the sale of the investment in 2024.
Accounting Principles
ISBN: 9781119707110
14th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Jill E. Mitchell