Chapter 1 Problem 12-3
Bonds held as trading
Jan. 1 Trading securities 3,761,000
Cash 3,761,000
July 1 Cash 240,000
Interest income (4,000,000 x 12%) 240,000
Dec. 31 Accrued interest receivable 240,000
Interest income 240,000
31 Trading securities 439,000
Unrealized gain – TS (4,200,000 – 3,761,000) 439,000
Bonds held as available for sale
Jan. 1 Available for sale securities 3,761,000
Cash 3,761,000
July 1 Cash 240,000
Interest income 240,000
154
July 1 Available for sale securities 23,270
Interest income 23,270
Interest income (3,761,000 x 7%) 263,270
Interest received 240,000
Amortization of discount 23,270
Dec. 31 Accrued interest receivable 240,000
Interest income 240,000
31 Available for sale securities 24,899
Interest income 24,899
Interest income (3,784,270 x 7%) 264,899
Interest accrued 240,000
Amortization of discount 24,899
31 Available for sale securities 390,831
Unrealized gain – AFS 390,831
Market value (4,000,000 x 105) 4,200,000
Book value 3,809,169
Unrealized gain 390,831
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