Week 4 homework assignment solution
Exercises E12-1, E12-5, E12-7, and E12-14
E 12–1: Securities held-to-maturity; fetter siege; telling attention
Tanner-UNF Corporation uncongenial as a long-term siege $240 pet of 6% fetters, determinationd July 1, on July 1, 2013. Fraternity skillful-treatment has the actual eager and force to halt the fetters until manliness. The chaffer attention admonish (yield) was 8% for fetters of correspondent facilitate and manliness. Tanner-UNF remunerated $200 pet for the fetters. The fraternity obtain take attention semiannually on June 30 and December 31. As a issue of changing chaffer provisions, the spotless compute of the fetters at December 31, 2013 was $210 pet.
1. Prepare the chronicle initiation to archives Tanner-UNF’s siege in the fetters on July 1, 2013.
2. Prepare the chronicle initiation by Tanner-UNF to archives attention on December 31, 2013, at the telling (market) admonish.
3. At what similarity obtain Tanner-UNF description its siege in the December 31, 2013, similarize subterfuge? Why?
4. Suppose Moody’s fetter rating performance downgraded the facilitate rating of the fetters motivating Tanner-UNF to retail the siege on January 2, 2014, for $190 pet. Prepare the chronicle initiation to archives the sale.
12–5: Various actions of to trading securities
Rantzow-Lear Fraternity buys and retails securities expecting to deserve allowance on short-term differences in charge. The fraternity’s fiscal year ends on December 31. The aftercited selected actions of to Rantzow-Lear’s TRADING ACCOUNT occurred during December 2013 and the primeval week of 2014.
Dec. 17 Purchased 100,000 Grocers’ Supply Corporation preferred distributes for $350,000.
28 Received specie dividends of $2,000 from the Grocers’ Supply Corporation preferred distributes.
31 Recorded any essential adjusting initiation of to the Grocers’ Supply Corporation preferred distributes. The chaffer charge of the hoard was $4 per distribute.
Jan.5 Sold the Grocers’ Supply Corporation preferred distributes for $395,000.
1. Prepare the misapply chronicle initiation for each action.
2. Indicate any similaritys that Rantzow-Lear Fraternity would description in its 2013 similarize subterfuge and allowance proposition as a issue of this siege.
E 12–7: Securities available-for-sale; adjusting entries
Loreal-American Corporation acquisitiond sundry chafferable securities during 2013. At December 31, 2013, the fraternity had the sieges in dishonorable hoard listed under. None was held at the decisive descriptioning determination, December 31, 2012, and all are considered securities available-for-sale.
1. Prepare the misapply adjusting initiation at December 31, 2013.
2. What similaritys would be descriptioned in the allowance proposition at December 31, 2013, as a issue of the adjusting initiation?
E 12–14: Siege securities and equity order sieges compared
LO12–3, LO12–4, LO12–5
As a long-term siege, Painters’ Equipment Fraternity 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 determination, the spotless compute and body compute of AMC’s net possessions were similar. During the year, AMC deserveed net allowance of $250,000 and as sorted specie dividends of 25 cents per distribute. At year-end, the spotless compute of the distributes is $505,000.
1. Assume no symbolical govern was uncongenial. Prepare the misapply chronicle entries from the acquisition through the end of the year.
2. Assume symbolical govern was uncongenial. Prepare the misapply chronicle entries from the acquisition through the end of the year.