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Ellen, Lawyer, Accountant & Researcher
Category: Business and Finance Homework
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Experience:  25 years of experience helping people like you.
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For each of the 5 problems below, could you find the correct

Customer Question

For each of the 5 problems below, could you find the correct answer for each problem accompanied by all of your reasoning and math for each problem? I need the information in 24 hours or sooner.

Question 1. Question : Johnson Company purchased bonds with a face amount of $400,000 between interest payment dates. Johnson purchased the bonds at 102, paid brokerage costs of $6,000, and paid accrued interest of $10,000 for 3 months. The amount to record as the cost of this long-term investment in bonds is





Question 2. Question : On January 3, 2010, Nixon Co. acquires $100,000 of Jones Company’s 10-year, 10% bonds at a price of $106,418 to yield 9%. Interest is payable each December 31. The bonds are classified as held to maturity.

Assuming that Nixon Co. uses the effective-interest method, what is the amount of interest revenue that would be recognized in 2011 related to these bonds?





Question 3. Question : On its December 31, 2010 balance sheet, Smith Company appropriately reported a $10,000 debit balance in its Securities Fair Value Adjustment (Available-for-Sale) account. There was no change during 2011 in the composition of Smith's portfolio of marketable equity securities held as available-for-sale securities. The following information pertains to that portfolio:

Security Cost Fair Value at 12/31/11

X $125,000 $160,000
Y 100,000 95,000
Z 175,000 125,000

$400,000 $380,000

The amount of unrealized loss to appear as a component of comprehensive income for the year ending December 31, 2011 is





Question 4. Question : Valentine Corp. began operations in 2010. An analysis of Valentine's equity securities portfolio acquired in 2010 shows the following totals at December 31, 2010 for trading and available-for-sale securities:

Trading Available-For-Sale
Securities Securities

Aggregate Cost $90,000 $110,000
Aggregate Fair Value 65,000 95,000

What amount should Valentine report in its 2010 income statement for unrealized holding loss?





Question 5. Question : On December 31, 2010, Shannon Co. purchased equity securities as trading securities. Pertinent data are as follows:

Fair Value
Security Cost at 12/31/11
A $132,000 $117,000
B 168,000 186,000
C 288,000 258,000

On December 31, 2011, Shannon Corp. transferred its investment in Security C from trading to available for sale because Shannon intends to retain Security C as a long-term investment. What total amount of gain or loss on its securities should be included in Shannon's income statement for the year ended December 31, 2011?

$3,000 gain

$27,000 loss

$30,000 loss

$45,000 loss
Submitted: 2 years ago.
Category: Business and Finance Homework
Expert:  Ellen replied 2 years ago.

Hi Richard,

Here are my answers for comparison with your own:

1 $424,000
2 $9,540 ($106,418 x .09) - ($100,000 x .10 ) = ($422)
($106,418 - $422) x .09 = $9540
3 $20,000 ($400,000 - $380,000)
4. $30,000 ($10,000 + $20,000)
6. $27,000 loss

Best Regards,

Customer: replied 2 years ago.

Thank you for your help. The individual that initially failed to provide me with the correct answers for these problems just came through. According to them, the correct answers for the questions were:

1) $414,000; 2) $9,540; 3) $30,000; 4) $25,000; 5) $27,000 loss. Thank you for your help anyway.

Expert:  Ellen replied 2 years ago.


I have the answer key. My answers are correct

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