During 2018, Dana Company decided to begin investing its idle cash in marketable
ID: 2431353 • Letter: D
Question
During 2018, Dana Company decided to begin investing its idle cash in marketable securities. The information contained below relates to Dana’s 2018 marketable security transactions: Apr. 1 Purchased $20,000 face value of Solomon Inc. 12% bonds at par plus accrued interest; interest on the bonds is payable each June 30 and December 31 June 30 Received the semiannual interest on the Solomon bonds. Nov. 1 Purchased $30,000 face value of Edwards Company 11% bonds at par plus accrued interest; interest on the bonds is payable each June 1 and December 1. Dec. 1 Received the interest on the Edwards bonds and sold the bonds for $30,300. Dec. 31 Received the interest on the Solomon bonds. At year-end, the market price of the Solomon bonds was $20,200. Required: 1. Record Dana’s investment transactions for 2018. 2. Show the items of income or loss on temporary investments Dana reports on its 2018 income statement. 3. Show the carrying value of Dana’s investment account on its December 31, 2018, balance sheet.
Explanation / Answer
1)
[being investment made and paid for 3months accrued interest 20000*.12*3/12] [31 dec -1 april]
2)
3)
Date Account title Debit credit April 1 Short term investment 20000 Interest receivable 600 cash 20600[being investment made and paid for 3months accrued interest 20000*.12*3/12] [31 dec -1 april]
JUne 30 Cash 1200 Interest receivable 600 Interest revenue [20000*.12*3/12] [1april -30 june] 600 Nov 1 short term investment 30000 Interest receivable 1375 cash 31375 [being investment made along with 5 month accrued interest 30000*.11*5/12] [1june - 1 nov ]Related Questions
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