Chapter 1 Problem 12-4
Aug. 1 Trading securities (5,000,000 x 104) 5,200,000
Interest income (5,000,000 x 12% x 3/12) 150,000
Cash 5,350,000
31 Trading securities (2,000,000 x 98) 1,960,000
Interest income (2,000,000 x 12% x 2/12) 40,000
Cash 2,000,000
Nov. 1 Cash (5,000,000 x 12% x 6/12) 300,000
Interest income 300,000
Dec. 1 Cash (1,880,000 + 20,000) 1,900,000
Loss on sale of trading securities 200,000
Trading securities 2,080,000
Interest income (2,000,000 x 12% x 1/12) 20,000
Selling price (2,040,000 – 160,000) 1,880,000
Less: Cost of bonds sold (2,000/5,000 x 5,200,000) 2,080,000
Loss on sale ( 200,000)
155
Dec. 31 Cash (2,000,000 x 12% x 6/12) 120,000
Interest income 120,000
31 Accrued interest receivable (3,000,000 x 12% x 2/12) 60,000
Interest income 60,000
31 Unrealized loss – TS 160,000
Trading securities 160,000
Carrying amount Market
Acme bonds (3,000,000 x 98%) 3,120,000 2,940,000
Avco bonds (2,000,000 x 99%) 1,960,000 1,980,000
5,080,000 4,920,000
Current assets:
Trading securities, at market value 4,920,000
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