Construction Forms Corporation buys securities to be available for sale when circumstances warrant, not to profit from short-term differences in price and not necessarily to hold debt securities to maturity. The following selected transactions relate to investment activities of Construction Forms whose fiscal year ends on December 31. No investments were held by Construction Forms at the beginning of the year. 2013
Parnell purchased $200 million of 10% coupon bonds at face value from Oracle Wholesale Corporation on April 1.
Parnell bought this security to be available for sale when circumstances warrant, not to profit from short-term fluctuations in value, and not to hold the bonds to maturity.
Parnell recorded the following journal entry for this transaction: Dr. Investment in Oracle Bonds $200 million Cr. Cash $200 million It is now December 31.
Interest income has been recorded during the year as interest payments have been received by Parnell.
The Oracle bonds are currently valued on the financial market at $205 million. Select the appropriate adjusting entry, if one is necessary. bought this security to be available for sale when circumstances warrant, not to profit from short-term fluctuations in value, and not to hold the bonds to maturity. Parnell recorded the following journal entry for this transaction:
Required:
1. Prepare the appropriate journal entry for each transaction or event. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i. e., 5,500,000 should be entered as 5.50).)
DateGeneral JournalDebitCredit
March 02, 2013Investment in Platinum Gauges, inc., shares
Cash
April 12, 2013Investment in Zenith bonds
Cash
July 18, 2013Cash
Investment revenue
October 15, 2013Cash
Investment Revenue
October 16, 2013Cash
Investment in Zenith bonds
November 01, 2013Investment in LTD preferred shares
Cash
DateGeneral JournalDebitCredit
Dec 31, 2013Net unrealized holding gains and losses - OCI
Fair value adjustment
DateGeneral JournalDebitCredit
Jan 23, 2014Cash
Investment in Platinum Gauges shares
Mar 01, 2014Cash
Loss on sale of investment
2. Show the amounts that would be reported in the company's 2013 income statement relative to these investments. (Enter your answers in millions rounded to 2 decimal places (i. e., 5,500,000 should be entered as 5.50).)
2013 Income Statement
($ in millions)
Investment revenue
Gain on sale of investments
Other comprehensive invome:
Net unrealized holding gains (losses) on investments