Assignment Gradebook ORION Problem 17B-7 The following information relates to th

Question

Assignment Gradebook ORION Problem 17B-7 The following information relates to the debt secunities investments of Coronado Company. 1. On February 1, the company purchased 12% bonds of Gibbons Co. having a par value of $315,600 at 100 plus accrued rterest. Interest is payable April 1 and October 1. 2. On April 1, semiannual interest is received. 3. on July 1, 9% bonds of Sampson Inc were puchased. These bonds with a par value of $212,400 were puchased at 100 plus accrued interest. Interest dates are June 1 and December 1. 4. On September 1, bonds with a par value of $55,200, purchased on February 1, are sold at 99 plus accrued interest 5. On October 1, semiannual interest is received. 6. On December 1, semiannual interest is received 7. On December 31, the fair value of the bonds purchased February 1 and July 1 are 95 and 93, respectively (a) Prepare any journal entries you consider necessary, inchuding year end entries (December 31), assuming these are available-for sale securities, (Credit account titles ane autommatically im for the ansoints amount is entered. Do not indent nsanually. IFno entry is requiredl, select "No Entry for the account tites and enter No. Date Account Titles and Explanation (1) Feb. 1 Delbit Credit (3) Jul. 1

Explanation / Answer

(a) Journal Entries in the books of Coronado Company (Amount in $)

No. Date Particulars Debit Credit 1 Feb. 1 Investment in 12% Bonds (par value) Dr. 315,600 Accrued Interest (from october 1 to Feb. 1) Dr. 12,624 To Cash 328,224 2 April 1 Cash Dr. 18,936 To Interest on 12% bonds (semiannually) 18,936 3 July 1 Investment in 9% bonds Dr. 212,400 Accrued Interest(from June 1 to July 1) Dr. 1,593 To Cash 213,993 4 Sept.1 Cash(55,200-552+2,760) Dr. 57,408 Loss on Sale of Investments (55,200*1%) Dr. 552 To Investments in 12% Bonds 55,200 To Accrued Interest(from April 1 to Sept.1) 2,760 5 Oct. 1 Cash Dr. 15,624 To interest on 12% bonds(315,600-55,200)*1/2*12% 15,624 6 Dec.1 Cash Dr. 9,558 To interest on 9% bonds(212,400*9%*1/2) 9,558 7 Dec.31 Income statement Dr. 27,888 To Investment in 12% bonds(315,600-55,200)*5/100 13,020 To investment in 9% bonds(212,400*7/100) 14,868 (To record adjustment for decline in fair value of bonds)

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