Public company entered into the following transactions during the year ended December 31, 2021: 1) On January
Question:
Public company entered into the following transactions during the year ended December 31, 2021:
1) On January 2, 2021, purchased $260,000 of the 6% bonds of Miron Ltd. The bonds mature on December 31, 2025 and pay interest every June and December 31. The bond were purchased to yield 5%.
2) 2,800 shares of Teal Company at a cost of $21 per share. No dividends were paid during 2021. Transaction costs of $1,500 were paid for this transaction.
Required
a)Prepare the journal entries for the investment in the bonds of Miron for the year 2021 assuming Red Inc. uses the Amortized Cost method to account for the bonds.
b) Assume that on December 31, 2021, the market value of the Miron bonds was $280,000. If Red Inc. classified the bonds as FVTOCI:
1. Prepare the journal entry at December 31, 2021 to adjust the bonds to the fair value.
2. What would be the interest revenue for the 6 months ended June 30, 2022?
C. Assume that 1,800 shares of Teal Company were sold on July 1, 2022 at a price of $25 per share. The transaction costs of $700 were paid for this transaction.
The remaining shares had a market value of $30 on December 31, 2022. Write all journal entries relative to Teal Company shares assuming that these are classified as FVTOCI.
Expert Answer:
Question a Answer Journal entries for the investment in the bonds Date Accounts Debit Credit Jan 2 2... View the full answer
