As a recently hired accountant for Reeves Incorporated., you are provided with last year's balance sheet...

   

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As a recently hired accountant for Reeves Incorporated., you are provided with last year's balance sheet to familiarize yourself with the business. Reeves Incorporated Balance Sheet December 31, 2017 Assets_ Current Assets Cash Accounts Receivable Short-term Investments Inventories Prepaid Expenses Total Current Assets Property, plant and equip (net) Intangibles and other assets Total Assets Current Liabilities Accounts payable Short-term notes Other current liabilities Total Current Liabilities Long-term debt Total Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholder's Equity Total liabilities + Stockholder's $1,054.312 123,200 738,054 578,366 82.310 $2,576,242 832,400 692.175 $4,100,817 69,210 131,870 200,574 $401,654 1,962,357 $2,364,011 1,421,300 315,506 $1.736.806 $4,100,817 You are also given the following information that list select business activities for the current year, 2018 1. The company acquired as a long-term investment $1 million of 6% bonds, on March 1, 2018. Company management has the positive intent and ability to hold the bonds until they mature in 5 years on March 1, 2023. The market interest rate was 8% for the bonds and the company paid $918,891.04 for the bonds. The company will receive interest semiannually on August 31st and February 28th, Because of changing market conditions, the fair value of the bonds at December 31, 2018 was $1,050,000. Required: a. Prepare the journal entry to record the investment in the bonds on March 1, 2018 b. Prepare the journal entry to record the interest payment received on August 31, 2018 using the effective (market) interest method c. Prepare the adjusting entry (if necessary) for the change in fair value of the bond at December 31, 2018 DATE 1-Apr 1-Jun 31-Dec DESCRIPTION DEBIT CREDIT As a recently hired accountant for Reeves Incorporated., you are provided with last year's balance sheet to familiarize yourself with the business. Reeves Incorporated Balance Sheet December 31, 2017 Assets_ Current Assets Cash Accounts Receivable Short-term Investments Inventories Prepaid Expenses Total Current Assets Property, plant and equip (net) Intangibles and other assets Total Assets Current Liabilities Accounts payable Short-term notes Other current liabilities Total Current Liabilities Long-term debt Total Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholder's Equity Total liabilities + Stockholder's $1,054.312 123,200 738,054 578,366 82.310 $2,576,242 832,400 692.175 $4,100,817 69,210 131,870 200,574 $401,654 1,962,357 $2,364,011 1,421,300 315,506 $1.736.806 $4,100,817 You are also given the following information that list select business activities for the current year, 2018 1. The company acquired as a long-term investment $1 million of 6% bonds, on March 1, 2018. Company management has the positive intent and ability to hold the bonds until they mature in 5 years on March 1, 2023. The market interest rate was 8% for the bonds and the company paid $918,891.04 for the bonds. The company will receive interest semiannually on August 31st and February 28th, Because of changing market conditions, the fair value of the bonds at December 31, 2018 was $1,050,000. Required: a. Prepare the journal entry to record the investment in the bonds on March 1, 2018 b. Prepare the journal entry to record the interest payment received on August 31, 2018 using the effective (market) interest method c. Prepare the adjusting entry (if necessary) for the change in fair value of the bond at December 31, 2018 DATE 1-Apr 1-Jun 31-Dec DESCRIPTION DEBIT CREDIT

Answer rating: 100% (QA)

Ans Maturity Value 1000000 Purchase amount 918891 C... View the full answer