Answer:
1. Journalize the transactions for Rose's investment in Sprouts' stock:
<u>March 1 2018</u>
Dr Trading securities - Sprouts's stock 12,000
Cr Cash 12,000
(to record the purchase of Sprout's stock)
<u>October 1 2018</u>
Dr Cash 350
Cr Dividend Income 350
(to record the dividend receipt from Sprout's stock)
<u>October 31 2018</u>
Dr Cash 12,250
Cr Gain on disposal of short-term investment 250
Cr Trading securities - Sprouts's stock 12,000
(to record disposal of Sprout's stock)
2. Net effect of the investment on Rose's net income for the year ended December 31, 2018: $600.
Explanation:
1. As this investment is short-term investment and is held for sell, fair value methodology should be applied to record this transaction. The detailed journal entries are as in answer part.
2. As fair value methodology is applied, the net income of Rose will include: dividend income + gain on disposal of short-term investment = $350 + $250 = $600.
Answer:
The proceeds from the bond issue are allocated between the bonds and the warrants on the basis of their relative market values.
Explanation:
Bonds are securities issued by the company where investor can invest in such securities and can earn interest.
Warrants are rights which states that on redemption of bonds it shall be converted into company's shares.
When bonds are issued with detachable warrants, that means there is a basic amount of bonds and warrants. Also, each shall be accounted separately.
Bond issue of these bonds includes value of bonds that shall be accounted and added to value of bonds, and the value of warrants shall be accounted in warrants.
Answer:
I think that it is C I am not sure tho
Explanation:
These are payment terms in the accounting. The first term 2/10 means that if you can pay the amount after 10 days, you would be given a 2% discount. If not, that's what the second terms means. This means you have to pay the net or full amount within 30 days.
So, if he can pay within 10 days, he will only have to give $3214.4. If not, then he would have to pay $3280 within 30 days.
Answer:
Debit to bad debt expense for $3,648
Explanation:
This is because the company needs to show the total amount in the Allowance for doubtful accounts as credit balance. It means that if for instance the balance today is $1,057 you'll need a new entry to adjust the balance with the bad debt.
It means that the entry must be a debit in bad debt expense for $3,648 while the corresponding credit goes to allowance for doubtful accounts.
