E9-29 Marketable Debt Securities Use the financial statement effects template to
ID: 2540897 • Letter: E
Question
E9-29 Marketable Debt Securities
Use the financial statement effects template to record the accounts and amounts for the following four transactions involving investments in marketable debt securities classified as available-for-sale securities. Assume that these transactions occur in 2016 (before the new rules for securities went into effect)
a. Loudder Inc. purchases 5,000 bonds with a face value of $1,000 per bond. The bonds are purchased at par for cash and pay interest at an annual rate of 4%
b. Loudder receives semi-annual cash interest of $200,000
c. Year-end fair value of the bonds is $978 per bond
d. Shortly after year-end, Loudder sells all 5,000 bonds for $970 per bond
template:
transaction cash asset noncash assets liabilities contrib. capital earned capital revanues expenses net income 1 2Explanation / Answer
template:
transaction
cash asset
non cash assets
liabilities
contrib. capital
earned capital
revenue
expenses
net income
1
-5000000
5000000
0
0
0
0
0
0
0
2
200000
0
0
0
200000
200000
0
200000
3
0
-110000
0
0
-110000
-110000
-110000
4
4850000
4890000
-40000
-40000
-40000
template:
transaction
cash asset
non cash assets
liabilities
contrib. capital
earned capital
revenue
expenses
net income
1
-5000000
5000000
0
0
0
0
0
0
0
2
200000
0
0
0
200000
200000
0
200000
3
0
-110000
0
0
-110000
-110000
-110000
4
4850000
4890000
-40000
-40000
-40000
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