g debt securities. hased Verizon bonds for hased Apple bonds for $7 hased Mastercard bonds f some of its Verizon bon $4,000 for $4,100 cash. some of its Apple bonds 000 for $55,400 cash. hased Walmart bonds for

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Kirkland Company had no trading debt securities prior to
this year. It had the following transactions this year
involving trading debt securities.
August 2 Purchased Verizon bonds for $50,000.
September 7 Purchased Apple bonds for $75,000.
September 12 Purchased Mastercard bonds for $60,000.
October 21 Sold some of its Verizon bonds that had
cost $4,000 for $4,100 cash.
October 23 Sold some of its Apple bonds that had cost
$55,000 for $55,400 cash.
November 1 Purchased Walmart bonds for $80,000.
December 10 Sold all of its Mastercard bonds for
$58,000 cash.
Required
1. Prepare journal entries to record these transactions.
2. Prepare a table to compare the year-end cost and fair
values of its trading debt securities. Year-end fair values:
Verizon, $48,500; Apple, $42,000; and Walmart, $59,000.
3. Prepare the adjusting entry to record the year-end fair
value adjustment for the portfolio of trading debt
securities.
Complete this question by entering your answers
Required 1 Required 2 Required 3
Prepare the adjusting entry to record the year-end fair
of trading debt securities.
View transaction list
Journal entry worksheet
<
1
Record the year-end adjustment to fair value, if any.
Note: Enter debits before credits.
Date
December
01
Account Title
Debit
Credit
Transcribed Image Text:Kirkland Company had no trading debt securities prior to this year. It had the following transactions this year involving trading debt securities. August 2 Purchased Verizon bonds for $50,000. September 7 Purchased Apple bonds for $75,000. September 12 Purchased Mastercard bonds for $60,000. October 21 Sold some of its Verizon bonds that had cost $4,000 for $4,100 cash. October 23 Sold some of its Apple bonds that had cost $55,000 for $55,400 cash. November 1 Purchased Walmart bonds for $80,000. December 10 Sold all of its Mastercard bonds for $58,000 cash. Required 1. Prepare journal entries to record these transactions. 2. Prepare a table to compare the year-end cost and fair values of its trading debt securities. Year-end fair values: Verizon, $48,500; Apple, $42,000; and Walmart, $59,000. 3. Prepare the adjusting entry to record the year-end fair value adjustment for the portfolio of trading debt securities. Complete this question by entering your answers Required 1 Required 2 Required 3 Prepare the adjusting entry to record the year-end fair of trading debt securities. View transaction list Journal entry worksheet < 1 Record the year-end adjustment to fair value, if any. Note: Enter debits before credits. Date December 01 Account Title Debit Credit
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