Week 4 homework assignment solution


Exercises E12-1, E12-5, E12-7, and E12-14

 

E 12–1: Securities held-to-maturity; security siege; serviceable cause

LO12–1

      Tanner-UNF Corporation adventitious as a long-term siege $240 favorite of 6% securitys, durationd July 1, on July 1, 2013. Aggregation skill has the express urgent and force to restrain the securitys until ripeness. The dispense cause objurgate (yield) was 8% for securitys of resembling expose and ripeness. Tanner-UNF paid $200 favorite for the securitys. The aggregation procure entertain cause semiannually on June 30 and December 31. As a development of changing dispense conditions, the impartial prize of the securitys at December 31, 2013 was $210 favorite.

     

       

          Required:

        1.  Prepare the life opening to archives Tanner-UNF’s siege in the securitys on July 1, 2013.

        2. Prepare the life opening by Tanner-UNF to archives cause on December 31, 2013, at the           serviceable (market) objurgate.

         3. At what total procure Tanner-UNF rumor its siege in the December 31, 2013, counterpoise quibble? Why?

         4. Suppose Moody’s security rating performance downgraded the expose rating of the securitys motivating Tanner-UNF to hawk the siege on January 2, 2014, for $190 favorite. Prepare the life opening to archives the sale.

 

 

 

12–5: Various occurrences regarding to trading securities

     LO12–2

    Rantzow-Lear Aggregation buys and hawks securities expecting to gain proceeds on short-term differences in worth. The aggregation’s fiscal year ends on December 31. The forthcoming clarified occurrences regarding to Rantzow-Lear’s TRADING ACCOUNT occurred during December 2013 and the chief week of 2014.

   

      2013

     Dec. 17 Purchased 100,000 Grocers’ Supply Corporation preferred distributes for $350,000.

             28 Received coin dividends of $2,000 from the Grocers’ Supply Corporation preferred distributes.

 

             31 Recorded any essential adjusting opening regarding to the Grocers’ Supply Corporation preferred distributes. The dispense worth of the accumulation was $4 per distribute.

     

    2014

    Jan.5 Sold the Grocers’ Supply Corporation preferred distributes for $395,000.

      Required:

      1. Prepare the mismiswithhold life opening for each occurrence.

       2. Indicate any totals that Rantzow-Lear Aggregation would rumor in its 2013 counterpoise quibble and proceeds proposition as a development of this siege.

 

 

E 12–7: Securities available-for-sale; adjusting entries

     LO12–3

    Loreal-American Corporation acquisitiond distinct dispenseable securities during 2013. At December 31, 2013, the aggregation had the sieges in spiritless accumulation listed adown. None was held at the conclusive rumoring duration, December 31, 2012, and all are considered securities available-for-sale.

 

 

Required:

1. Prepare the mismiswithhold adjusting opening at December 31, 2013.

2.       What totals would be rumored in the proceeds proposition at December 31, 2013, as a development of the adjusting opening?

     

   

    

   

      E 12–14: Siege securities and equity way sieges compared

     LO12–3, LO12–4, LO12–5

    As a long-term siege, Painters’ Equipment Aggregation acquisitiond 20% of AMC Supplies Inc.’s 400,000 distributes for $480,000 at the opening of the fiscal year of twain companies. On the acquisition duration, the impartial prize and tome prize of AMC’s net possessions were similar. During the year, AMC gained net proceeds of $250,000 and select coin dividends of 25 cents per distribute. At year-end, the impartial prize of the distributes is $505,000.

   

     

        Required:

1.       Assume no weighty bias was adventitious. Prepare the mismiswithhold life entries from the acquisition through the end of the year.

 

 

2.       Assume weighty bias was adventitious. Prepare the mismiswithhold life entries from the acquisition through the end of the year.