Accounting exercises | Accounting homework help

ill in the dollar changes caused in the Investment account and Dividend Revenue or Investment Revenue account by each of the following transactions, assuming Crane Company uses (a) the fair value method and (b) the equity method for accounting for its investments in Hudson Company. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for amounts.)

At the beginning of Year 1, Crane bought 25% of Hudson’s common stock at its book value. Total book value of all Hudson’s common stock was $850,000 on this date.

During Year 1, Hudson reported $54,000 of net income and paid $27,000 of dividends.

During Year 2, Hudson reported $31,500 of net income and paid $20,000 of dividends.

During Year 3, Hudson reported a net loss of $12,000 and paid $3,800 of dividends.

Indicate the Year 3 ending balance in the Investment account, and cumulative totals for Years 1, 2, and 3 for dividend revenue and investment revenue.

 

Exercise 122 (Part Level Submission)

The following information is available for Irwin Company for 2018:

Realized gain on sale of available-for-sale debt securities

Unrealized holding gain arising during the period on available-for-sale debt securities

Reclassification adjustment for gains included in net income

 

 

 

 

 

 

(a)

 

Determine other comprehensive income for 2018.

Other comprehensive income

$

 

 

 

 

Exercise 123

On January 2, 2018, Tylor Company issued a 4-year, $600,000 note at 8% fixed interest, interest payable semiannually. Tylor now wants to change the note to a variable rate note. As a result, on January 2, 2018, Tylor Company enters into an interest rate swap where it agrees to receive 8% fixed and pay LIBOR of 5.5% for the first 6 months on $600,000. At each 6-month period, the variable interest rate will be reset. The variable rate is reset to 6.6% on June 30, 2018.

 

 

 

 

 

Compute the net interest expense to be reported for this note and related swap transaction as of June 30, 2018.

$

 

 

 

 

 

 

Compute the net interest expense to be reported for this note and related swap transaction as of December 31, 2018.

$

 

 

 

 

Brief Exercise 17-2

Pina Company purchased, on January 1, 2017, as an available-for-sale security, $65,000 of the 8%, 5-year bonds of Chester Corporation for $60,072, which provides an 10% return.

Prepare Pina’s journal entries for (a) the purchase of the investment, (b) the receipt of annual interest and discount amortization, and (c) the year-end fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) The bonds have a year-end fair value of $61,750. (Round answers to 0 decimal places, e.g. 1,225. Credit account titles are automatically indented when 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.)

 

Brief Exercise 17-5

Bridgeport Corporation purchased 440 shares of Sherman Inc. common stock for $12,000 (Bridgeport does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share.

Prepare Bridgeport’ journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account titles are automatically indented when 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.)

 

Brief Exercise 17-7

Riverbed Corporation purchased for $270,000 a 30% interest in Murphy, Inc. This investment enables Riverbed to exert significant influence over Murphy. During the year, Murphy earned net income of $188,000 and paid dividends of $66,000.

Prepare Riverbed’s journal entries related to this investment. (Credit account titles are automatically indented when 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.)

Brief Exercise 17-11

Sage Company invests $10,300,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,790,000. Interest is paid on January 1.

Prepare journal entries for Sage Company to (a) record the transactions related to these bonds in 2017, assuming Sage does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Sage Company elects the fair value option to account for these bonds. (Credit account titles are automatically indented when 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.)

Account Titles and Explanation

(To record interest revenue)

(To record fair value adjustment)

 

Account Titles and Explanation

(To record interest revenue)

(To record fair value adjustment)

Click if you would like to Show Work for this question:

 

Brief Exercise 17-13

Presented below are two independent cases related to available-for-sale debt investments.


For each case, determine the amount of impairment loss, if any. (If no loss, please enter 0. Do not leave any fields blank.)

$

 

$

Click if you would like to Show Work for this question:

 

Exercise 17-3 (Part Level Submission)

On January 1, 2017, Whispering Company purchased 10% bonds having a maturity value of $340,000, for $367,149.34. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Whispering Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

 

 

 

 

 

 

(a)

 

Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when 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.)

Account Titles and Explanation

Click if you would like to Show Work for this question:

 

 

 

 

 

Exercise 17-9 (Part Level Submission)

At December 31, 2017, the available-for-sale debt portfolio for Grouper, Inc. is as follows.

Previous fair value adjustment balance—Dr.

Fair value adjustment—Dr.


On January 20, 2018, Grouper, Inc. sold security A for $17,365. The sale proceeds are net of brokerage fees.

 

 

 

 

 

 

(a)

 

Prepare the adjusting entry at December 31, 2017, to report the portfolio at fair value. (Credit account titles are automatically indented when 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.)

 

 

 

 

Exercise 17-12

The following are two independent situations.

Situation 1
Riverbed Cosmetics acquired 10% of the 196,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $69,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $116,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2
Marin, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 31,000 outstanding shares of common stock at a total cost of $8 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $38,400. On December 31, Seles reported a net income of $92,500 for the year.

Prepare all necessary journal entries in 2017 for both situations. (Credit account titles are automatically indented when 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.)

 

 

 

 

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

$


Given that the maturity value of the bonds is $791,000, should Swifty Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 

 

 

 

 

At December 31, 2018, the fair value of the municipal bonds is $749,000. Prepare the entry (if any) to record this information. (Credit account titles are automatically indented when 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.)

 

 

 

Exercise 17-27

On August 15, 2016, Windsor Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $792. The notional value of the call option is 880 shares, and the option price is $88. The option expires on January 31, 2017. The following data are available with respect to the call option.

Market Price of Counting
Crows Shares


Prepare the journal entries for Windsor for the following dates.

Investment in call option on Counting Crows shares on August 15, 2016.

September 30, 2016—Windsor prepares financial statements.

December 31, 2016—Windsor prepares financial statements.

January 15, 2017—Windsor settles the call option on the Counting Crows shares.


(Credit account titles are automatically indented when 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.)

Account Titles and Explanation

(To record the change in intrinsic value.)

(To record the time value change.)

(To record the change in intrinsic value.)

(To record the time value change.)

(To record the time value change.)

(To record settlement of call option.)

Click if you would like to Show Work for this question:

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.