1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Anit [1.1K]
3 years ago
6

Indigo Corporation purchased trading investment bonds for $55,000 at par. At December 31, Indigo received annual interest of $2,

200, and the fair value of the bonds was $52,500. Prepare Indigo' journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)
Business
1 answer:
babunello [35]3 years ago
6 0

Answer:

(a) the purchase of the investment

Dr. Investment in trading security $55,000

Cr. Cash                                          $55,000

(b) the interest receive

Dr. Interest receivable                       $2,200

Cr. Interest on Investment (income) $2,200

Dr. Cash                                              $2,200

Cr. Interest receivable                       $2,200

(c) the fair value adjustment

Dr. Unrealized Loss                        $2,500

Cr. Investment in trading security $2,500

Explanation:

Trading Investment Bonds are recorded as assets and these are reported at fair value. Any gain or loss arising from the fair value adjustment will be recorded. Fair value adjustment should be made at end of each reporting period and when a significant difference arose. Gain from the fair value adjustment will increase the value of Investment in trading security and loss will decrease the value.

Unrealized gain = Current Book value of Investment - Fair value

Unrealized gain = $55,000 - $52,500

Unrealized gain = $2,500

You might be interested in
Situational leadership theories propose that the effectiveness of a particular style of leader behavior depends on the situation
kondaur [170]

Answer:

1) Supportive behaviors->option (d)

2) Group-oriented decision-making behaviors->option (f)

3) Achievement-oriented behaviors->option (b)

4)  Work-facilitation behaviors->option (c)

5) Value-based behaviors->option (h)

6) Representation and networking behaviors->option (g)

7) Path-goal–clarifying behaviors->option (a)

8)  Interaction-facilitation behaviors->option (e)

Explanation:

1) Supportive behaviors:- (d)

Supportive conduct illustrates the need to meet and be polite to workers as illustrated in Option D.

Option A talks about offering guidance, Option B talks about setting goals, Option C talks about preparation and scheduling, Option E talks about conflict resolution, Option F talks about problem-solving and participatory decision-making, Option g talks about employee relationships, engagement, and networking, Option H talks about vision, self-confidence, high-perforation contact.

2) Group-oriented decision-making behaviors:- (f)

This leadership conduct poses a challenge to the group and allows them to engage in decision-making, to provide the required group analysis, etc.  

Option A talks about offering direction, Option B talks about setting goals, Option C talks about planning and scheduling, Option D talks about well-being and being comfortable with employees, Option E talks about conflict resolution, Option F talks about problem-solving and participatory decision-making, Option g talks about employee relationships, engagement, and networking.

3) Achievement-oriented behaviors:- (b)

This leadership conduct represents the setting of demanding goals for workers and shows confidence.  

Option A talks about providing guidance, option B talks about setting challenges, option C talks about planning and scheduling, option D talks about well-being and being friendly with employees, option E talks about dispute resolution, option F talks about problem-solving and participatory decision-making, option g talks about employee relationships, interaction, and networking.

4)  Work-facilitation behaviors:- (c)

This involves the process of planning, scheduling, etc. and providing feedback to assist employees as reflected in Option C.

Option A talks about offering direction, Option B talks about setting goals, Option C talks about planning and scheduling, Option D talks about well-being and being comfortable with employees, Option E talks about conflict resolution, Option F talks about problem-solving and participatory decision-making, Option g talks about employee relationships, engagement, and networking.

5) Value-based behaviors:- (h)

This activity involves vision building, ambition, confidence, communication of goals, loyalty, and high performance to others, etc.  

Option A talks about offering direction, Option B talks about setting goals, Option C talks about planning and scheduling, Option D talks about well-being and being comfortable with employees, Option E talks about conflict resolution, Option F talks about problem-solving and participatory decision-making, Option g talks about employee relationships, engagement, and networking.  

6) Representation and networking behaviors:- (g)

This conduct brings a positive light to others and maintains healthy relationships, which is expressed in option G.

Option A talks about offering direction, Option B talks about setting goals, Option C talks about planning and scheduling, Option D talks about well-being and being comfortable with employees, Option E talks about conflict resolution, Option F talks about problem-solving and participatory decision-making, Option g talks about employee relationships, engagement, and networking.  

7) Path-goal–clarifying behaviors:- (a)

This leadership offers encouragement for workers to fulfill their goals and emphasizes positive and negative impacts.

Option A talks about offering direction, Option B talks about setting goals, Option C talks about planning and scheduling, Option D talks about well-being and being comfortable with employees, Option E talks about conflict resolution, Option F talks about problem-solving and participatory decision-making, Option g talks about employee relationships, engagement, and networking.

8)  Interaction-facilitation behaviors:- (e)

This involves resolving disputes, facilitating interactions, etc.

Option A talks about offering direction, Option B talks about setting goals, Option C talks about planning and scheduling, Option D talks about well-being and being comfortable with employees, Option E talks about conflict resolution, Option F talks about problem-solving and participatory decision-making, Option g talks about employee relationships, engagement, and networking.

5 0
4 years ago
Disparate treatment could be legal if the discrimination: a. results in increased efficiency. b. is performed by a governmental
marta [7]

Answer:

The correct answer is D

Explanation:

Disparate treatment is the treatment which differing conduct or performed toward the individuals, where the differences are grounded on the individual age, colour, national origin, race, disability or religion status.

This treatment would be legal if the discrimination would be BFOQ (termed as bona fide occupational qualification), the courts must have held that in few situations that the factor like sex or religion might be BFOQ, which is important qualification for performing a job.

7 0
4 years ago
Each of the following situations occurred during 2011 for one of your audit clients:1. The write-off of inventory due to obsoles
In-s [12.5K]

Answer:

Situations during 2011 at an Audit Client

A. Appropriate Reporting Treatments:

1. Write-off of inventory due to obsolescence.

a. As an extraordinary item.

2. Discovery that depreciation expenses were omitted by accident from 2010's income statement.

c. As a prior period adjustment.

3. The useful lives of all machinery were changed from eight to five years.

f. As a change in accounting estimate.

4. The depreciation method used for all equipment was changed from the declining-balance to the straight-line method.

g. As a change in accounting estimate achieved by a change in accounting principle.

5. Ten million dollars face value of bonds payable were repurchased (paid off) prior to maturity resulting in a material loss of $500,000. The company considers the event unusual and infrequent.

b. As an unusual or infrequent gain or loss.

6. Restructuring costs were incurred.

b. As an unusual or infrequent gain or loss.

7. The Stridewell Company, a manufacturer of shoes, sold all of its retail outlets. It will continue to manufacture and sell its shoes to other retailers. A loss was incurred in the disposition of the retail stores. The retail stores are considered components of the entity.

e. As a discontinued operation.

8. The inventory costing method was changed from FIFO to average cost.

d. As a change in accounting principle.

B. Inclusion in the Income Statement:

1. CO

2. RE

3. CO

4. RE

5. BC

6. BC

7. BC

8. CO

Explanation:

1. Investopedia.com defined "Unusual or infrequent items" as "gains or losses from a lawsuit; losses or slowdown of operations due to natural disasters; restructuring costs; gains or losses from the sale of assets; costs associated with acquiring another business; losses from the early retirement of debt; and plant shutdown costs."

2. Extraordinary gains or losses are economic events which originate from continuing infrequent and unusual operations.  These gains and losses stem from the normal business activities of the company, but, they do not happen regularly, and are abnormal in nature.

3. A prior period adjustment is the correction of a past accounting error that occurred in the past financial statements.

4. According to investopedia.com, "A change in accounting principle is a change in how financial information is calculated, while a change in accounting estimate is a change in the actual financial information.  Changes in accounting principles are done retroactively, where financial statements have to be re-stated.  But, changes in estimates are not applied retroactively.

6 0
3 years ago
Congress is required to ensure that the tax law has the following characteristics: equality, certainty, convenience, and economy
Gnom [1K]

The given statement " Congress is required to ensure that the tax law has the following characteristics: equality, certainty, convenience, and economy " is False.

Explanation:

The Congress is authorized, taxation, fees and excise duty are laid down and collected, the debts are paid and the common good and security of the United States are assured. but all privileges, charges and excise duty are identical throughout the United States.

Borrowing money on the ledger of the US;

To control trade with foreign countries, as well as with the Indian tribes among several States.

Maintain a standardized naturalization requirement and common rules on bankruptcy filings in the United States.

To coin the currency, the value and international coin shall be regulated and the weights and measurements shall be established.

8 0
3 years ago
A company’s capital structure decisions address the ways a firm’s assets are financed (using debt, preferred stock, and common e
MArishka [77]

Answer:

Option D (The optimal........capital) would be the right choice.

Explanation:

  • The optimal composition of capital would be the one with the lowest average capital structure.
  • Such alternatives are meaningless since the optimal capital structure is not reflected by them. Maximizing earnings growth, interest burdens, or equity burdens would not enhance the worth including its shareholder.
7 0
3 years ago
Other questions:
  • A project will produce an operating cash flow of $31,200 a year for 7 years. The initial fixed asset investment in the project w
    13·1 answer
  • Pearl Corporation owns machinery that cost $27,600 when purchased on July 1, 2017. Depreciation has been recorded at a rate of $
    7·1 answer
  • Presented below is information related to equipment owned by Vaughn Company at December 31, 2017. Cost $9,360,000 Accumulated de
    14·1 answer
  • 2016 dec. 13 accepted a $9,500, 45-day, 8% note dated december 13 in granting miranda lee a time extension on her past-due accou
    13·1 answer
  • A gas station operates in a monopolistically competitive market and is in short-run equilibrium. Suppose that a fixed cost for t
    14·1 answer
  • A binding price ceiling...
    9·1 answer
  • The guidance for having infant sleep on their back to reduce the incidence of SIDS has a grade of A. Group of answer choices Pro
    6·1 answer
  • Kuzu company discovers in 2015 that its ending inventory at december 31, 2014, was $7,000 understated. what effect will this err
    14·2 answers
  • In the Keynesian-cross model, fiscal policy has a multiplied effect on income because fiscal policy: changes income, which chang
    14·2 answers
  • A company carefully defines its target market. Now the company will be able to focus on people with a preexisting need or intere
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!