Corolla Corp, began business in 2021. Prepare the general journal entries for Corolla Corp:

a. On 6/2/2021 purchased 300,000 shares of stock in PSG for $15 per share. Classified as Trading.

b. On 7/15/2021 purchased $1,000,000 face value of bonds in WARE for $968,000. Classified as available for sale.

c. The adjusting entries: on 12/31/2021 the stock was worth $12 per share. The carrying value of the bonds was $975,000 and the fair value of the bonds was $985,000.

d. On March 15, 2022 Corolla sold its entire portfolio of PSG stock for $17 per share.

e. On 12/15/2022 Corolla sold the WARE bonds when the carrying value was $981,000 and the fair value was 990,000

f. What is the effect on reported net income in 2021 and 2022 from these securities (ignore interest)? Net income effect $ ---- Net income 2022 effect $-----.

Answer rating: 100% (QA)

a DR Investment in Trading Securities PSG Stock 4500000 CR Cash 4500000 b DR AvailableforSale Securi... View the full answer