Question 1 The following information relates to the debt investments of Wildcat

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Question 1 The following information relates to the debt investments of Wildcat Inc. during a recent year: 1. On February 1, the company purchased Gibbons Corp. 10% bonds with a face value of $228,000 at 100 plus accrued interest. Interest is payable on April 1 and October 1. 2. On April 1, semi-annual interest is received on the Gibbons bonds. 3. On June 15, Sampson Inc. 9% bonds were purchased. The $152,000 par-value bonds were purchased at 100 plus accrued interest. Interest dates are June 1 and December 1. 4. On August 31, Gibbons Corp. bonds with a par value of $45,500 purchased on February 1 were sold at 99 plus accrued interest. 5. On October 1, semi-annual interest is received on the remaining Gibbons Corp. bonds. 6. On December 1, semi-annual interest is received on the Sampson Inc. bonds. 7. On December 31, the fair values of the bonds purchased on February 1 and June 15 are 98.5 and 101, respectively. Assume the investments are accounted for under the recognition and measurement requirements of IFRS 9 Financial Instruments. Collapse question part (a) Prepare all journal entries that you consider necessary, including December 31 year-end entries, assuming these investments are accounted for at fair value through net income, and interest income is not reported separately from other related investment gains and losses. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Explanation / Answer

1. Bond payable Ac Dr

To Cash

2. Cash Ac Dr

   To Accrued interest

3. Bond payable AC Dr

To Cash

4. Cash AC Dr

To Bond Payable

5. Cash Ac Dr

To accrued interest

6. Cash AC Dr

To accrued interest

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