ACC 423 Week 5 Final Exam 2 chapter-17

Brief Exercise 17-1

Teal Company purchased, on January 1, 2017, as a held-to-maturity investment,

$68,000

of the

10%

5

year bonds of Chester Corporation for

$63,098

, which provides an

12%

return.

Prepare Teal’s journal entries for

(a) the purchase of the investment, and

(b) the receipt of annual interest and discount amortization. Assume effective-interest amortization i

Brief Exercise 17-9

The following information relates to Culver Co. for the year ended December 31, 2017:

net income

1138

million;

unrealized holding loss of

$10.30

million related to available-for-sale debt securities during the year;

accumulated other comprehensive income of

$52.10

million on December 31, 2016.

Assuming no other changes in accumulated other comprehensive income. Determine (a) other comprehensive income for 2017,

(b) comprehensive income for 2017, and (c) accumulated other comprehensive income at December 31, 2017

Exercise 17-3

On January 1, 2017, Carla Company purchased

9%

bonds having a maturity value of

$250,000

, for

$270,502.00

The bonds provide the bondholders with a

7%

yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year.

Carla Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

a

Date

Account Title and Description

Debit

Credit

Jan 1, 2017

Debt Investments (Held to Maturity)

#######

         Cash

#######

Breif Exercise 17-13

Prsented below are two independat cases related to available-for-sale debts investments.

Case 1

Case 2

Ammortized cost

$39,350

$90,200

Fair value

$28,620

$100,920

Expected credit losses

$23,920

$81,460

For each case determined the amount of impairement loss if any,

Exercise 17-10

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

Security

Cost

Fair Value

Unrealised

Gain/Loss

A

140,875

120,750

-20,125

B

100,625

112,700

12,075

C

185,150

205,275

20,125

Total

426,650

438,725

12,075

Previous fair value adjustment-CR

3220

Fair Value adjustment-DR

8,855