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Chapter 19 - Intacc - Problem 19-3 & 19-4

The document outlines financial transactions related to trading securities and bond investments for the years 2023 and 2024, detailing acquisitions, interest income, sales, and unrealized losses. It includes specific dates and calculations for cash received, gains on sales, and accrued interest. Problems 19-3 and 19-4 illustrate the accounting entries and computations necessary for recording these transactions.

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Hanie Grace Iguid
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39 views2 pages

Chapter 19 - Intacc - Problem 19-3 & 19-4

The document outlines financial transactions related to trading securities and bond investments for the years 2023 and 2024, detailing acquisitions, interest income, sales, and unrealized losses. It includes specific dates and calculations for cash received, gains on sales, and accrued interest. Problems 19-3 and 19-4 illustrate the accounting entries and computations necessary for recording these transactions.

Uploaded by

Hanie Grace Iguid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 19 - INTACC - PROBLEM 19-3 & 19-4

Problem 19-3

2023
Mar. 1 Trading securities (2,000 x 1,000) x 93% - LONG Com. 1,860,000
Cash 1,860,000
Acquisition of bond investment

Apr. 1 Trading securities (4,000 x 1,000) x 95% - NATIONAL 3,800,000


Interest income (4,000,000 x 12% x 1/12) 40,000
Cash 3,840,000
Acquisition of bond investment

Aug. 1 Cash - LONG 100,000


Interest income (2,000,000 x 12% x 5/12) 100,000
Receipt of interest

Sept. 1 Cash - NATIONAL 240,000


Interest income (4,000,000 x 12% x 6/12) 240,000
Receipt of interest

Oct. 1 Cash 1,060,000


Trading securities - NATIONAL 950,000
Interest income 10,000
Gain on sale 100,000
Sale of 1,000 bond investment

Computation:
Sales price (1,000,000 x 105) 1,050,000
Add: Accrued interest (1,000,000 x 12% x 1/12) 10,000
Cash received 1,060,000

Sales price 1,050,000


Less: Carrying amount (1,000,000/4,000,000 x 3,800,000) 950,000
Gain on sale 100,000

Dec. 1 Cash 2,080,000


Trading securities 1,860,000
Interest income 80,000
Gain on sale 140,000
Sale of bond investment

Computation:
Sales price (2,000,000 x 100%) 2,000,000
Add: Accrued interest (2,000,000 x 12% x 4/12) 80,000
Cash received 2,080,000

Sales price 2,000,000


Less: Carrying amount 1,860,000
Gain on sale 140,000

31 Accrued interest - NATIONAL (3,000,000 x 12% x 4/12) 120,000


Interest income 120,000
To record for accrued interest

Unrealized loss 150,000


Trading securities 150,000
To recognized for the unrealized loss

Computation:
Market value (3,000,000 x 90%) 2,700,000
Less: Carrying amount (3,800,000 - 950,000) 2,850,000
Unrealized loss 150,000

Requirement 2
Bond investment - Dec. 31 (3,000,000 x 90%) 2,700,000

Problem 19-4
2023
July 1 Trading securities 2,200,000
Interest income (2,000,000 x 8% x 6/12) 80,000
Commission expense 50,000
Cash 2,330,000
Acquisition of bond investment

Dec. 31 Cash (2,000,000 x 8%) 160,000


Interest income 160,000
Receipt of interest

Unrealized loss 300,000


Trading securities 300,000
To recognized the unrealized loss

Computation:
Market value (2,000,000 x 95%) 1,900,000
Less: Carrying amount 2,200,000
Unrealized loss 300,000

2024
Mar. 1 Cash 2,140,000
Trading securities 1,900,000
Interest income 40,000
Gain on sale 200,000
Sale of bond investment

Computations:
Sales price 2,100,000
Add: Accrued interest (2,000,000 x 8% x 3/12) 40,000
Cash received 2,140,000

Sales price 2,100,000


Less: Market value - 2023 1,900,000
Gain on sale 200,000

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