Weaver Company purchased $500,000 face value bonds for $456,200 on January 1, 2016 that mature on January 1, 2021. The bonds pay interest annually at 8% and were purchased to yield 10%. Weaver uses the effective interest method. The summary should report:
- The amount Weaver should report on its December 31, 2016 balance sheet as an investment in held-to-maturity debt securities is $461,820.
- Fay Company reported investments in trading securities at a market value of $183,000 on December 31, 2015. At December 31, 2016, the market value was $181,500. The loss on these securities that should be included in Fay's income statement for the
Weaver Company purchased $500,000 face value bonds for $456,200 on January 1, 2016 that mature on January 1, 2021. The bonds pay interest annually at 8% and were purchased to yield 10%. Weaver uses the effective interest method. The summary should report:
- The amount Weaver should report on its December 31, 2016 balance sheet as an investment in held-to-maturity debt securities is $461,820.
- Fay Company reported investments in trading securities at a market value of $183,000 on December 31, 2015. At December 31, 2016, the market value was $181,500. The loss on these securities that should be included in Fay's income statement for the
Weaver Company purchased $500,000 face value bonds for $456,200 on January 1, 2016 that mature on January 1, 2021. The bonds pay interest annually at 8% and were purchased to yield 10%. Weaver uses the effective interest method. The summary should report:
- The amount Weaver should report on its December 31, 2016 balance sheet as an investment in held-to-maturity debt securities is $461,820.
- Fay Company reported investments in trading securities at a market value of $183,000 on December 31, 2015. At December 31, 2016, the market value was $181,500. The loss on these securities that should be included in Fay's income statement for the
Weaver Company purchased $500,000 face value bonds for $456,200 on January 1, 2016 that mature on January 1, 2021. The bonds pay interest annually at 8% and were purchased to yield 10%. Weaver uses the effective interest method. The summary should report:
- The amount Weaver should report on its December 31, 2016 balance sheet as an investment in held-to-maturity debt securities is $461,820.
- Fay Company reported investments in trading securities at a market value of $183,000 on December 31, 2015. At December 31, 2016, the market value was $181,500. The loss on these securities that should be included in Fay's income statement for the
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Acc 308 - 4-2 Homework: Chapter 13
1. Held-to-Maturity Bond Investment On January 1, 2016, Weaver Company purchased as held-to-maturity debt securities $500,000 face value of Park Corporation's 8% bonds for $456,200. The bonds were purchased to yield 10% interest and pay interest annually. The bonds mature on January 1, 2021. Weaver uses the effective interest method of amortization. What amount should Weaver report on its December 31, 2016, balance sheet as an investment in held-to- maturity debt securities? a.$456,200 b.$450,580 c.$461,820 = 456200 + 5620 d.$466,200 456,200 *0.1 - 500,000 *0.08 =5620
2. Trading Securities On its December 31, 2015, balance sheet, Fay Company reported investments, classified as trading securities, at a market value of $183,000. There was no change during 2016 in the composition of Fay's portfolio of marketable equity securities classified as trading securities. Pertinent data are as follows: Market Value at Market Value at Security Cost 12/31/15 12/31/16
A $ 60,000 $ 62,000 $ 63,000
B 45,000 42,000 40,000
C 80,000 79,000 78,500
Totals $185,000 $183,000 $181,500
What amount of loss on these securities should be included in Fay's income statement for the year ended December 31, 2016? a.$0 b.$3,500 c.$1,500 d.$2,000 3. Cash Dividends Received Page 2 of 6
Cash dividends declared out of current earnings were distributed to an investor. How will the investor's investment account be affected by those dividends under each of the following accounting methods? A
4. On September 30, Franz Corporation notices a decline in value of its investment in held- to-maturity bonds that it believes to be other than temporary. On that date, the carrying value of the bonds is $38,500 and the fair value is $22,980. Required: Prepare the journal entry to record the impairment.
5. Question Content Area
Classification of Investments The following investments occurred in 2018 for Mole Company. Required: a. Mole purchased 5% of the common stock on Brandon Company, a business which has a history of paying large quarterly dividends. Mole wishes to hold the securities for the forseeable future in order to receive these dividends. Trading b. Mole purchased a bond that will mature in 10 years. Mole purchased this bond because it expects that over the next 6 months, interest rates will fall, causing the bond price to increase. At that time, Mole plans to sell the bonds to earn a profit. Trading c. Mole purchased $100,000 of Wilson Company's convertible bonds. Mole has no intention of converting the bonds or selling the debt in the near future. Available-for-sale Page 3 of 6
d. Mole purchased 30% of the common stock in a supplier in an effort to have more input into the quality of the raw materials it receives. Equity method investment e. Mole purchased bonds for Collier Company with a face value of $100,000 for $95,000. The bonds pay interest of 8% semiannually. Mole has the ability and intent to hold the bonds to maturity and collect the principal and interest. Held-to-maturity 6. Miller Corporation acquired 30% of the outstanding common stock of Crowell Corporation for $160,000 on January 1, 2018, and obtained significant influence. The purchase price of the shares was equal to their book value. During 2018, the following information is available for Crowell: Mar. 31 Declared and paid a cash dividend of $50,000. June 30 Reported semiannual earnings of $120,000 for the first half of 2018. Sept. 30 Declared and paid a cash dividend of $50,000. Dec. 31 Reported semiannual earnings of $140,000 for the second half of 2018. 1. Prepare journal entries for Miller to reflect the 2018 transactions. Refer to the Chart of Accounts provided for the exact wording of the answer choices for text entries.
2. What is the balance in Miller’s investment account on December 31, 2018?
$208000 7. Miller Corporation acquired 30% of the outstanding common stock of Crowell Corporation for $160,000 on January 1, 2018, and obtained significant influence. The purchase price of the shares was equal to their book value. During 2018, the following information is available for Crowell: Mar. 31 Declared and paid a cash dividend of $50,000. June 30 Reported semiannual earnings of $110,000 for the first half of 2018. Sept. Declared and paid a cash dividend of $50,000. 30 Page 4 of 6
Mar. 31 Declared and paid a cash dividend of $50,000.
Dec. 31 Reported semiannual earnings of $150,000 for the second half of 2018. Required: 1. Prepare journal entries for Miller to reflect the preceding information.
2. What is the balance in Miller’s investment account on December 31, 2018?
$208000 8. Bond Investment Premium Amortization Schedule Mercer Corporation acquired $400,000 of Park Company’s bonds on June 30, 2018, for $409,991.12. The bonds carry a 12% stated interest rate and pay interest semiannually on June 30 and December 31. The appropriate market interest rate is 11%, and the bonds are due June 30, 2021. Required: 1.Prepare an investment interest income and premium amortization schedule, using the: a. straight-line method
