Icon Company

Debit Credit
Jan-01 Trading securities 3,761,000
Cash 3,761,000

Jul-01 Cash 240,000

Interest income (4,000,000 x 12% x 6/12) 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
4
Mature Company
Debit Credit
Aug-01 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-01 Cash (5,000,000 x 12% x 6/12) 300,000

Interest income 300,000

Dec-01 Cash (2,040,000 + 20,000) 2,060,000

Loss on sale of trading securities 40,000
Trading securities 2,080,000
Interest income (2,000,000 x 12% 1/12) 20,000

Selling price (2,0000,000 x 102) 2,040,000

Less: Cost of bonds sold (2,000/5,000 x 5,200,000) 2,080,000
Loss on sale 40,000

31 Cash (2,000,000 x 1296 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 secutrity, fair value 4,920,000
Bullish Company

Required a Debit Credit

Mar-01 Trading securities (2,000,000 x 93%) 1,860,000

Interest income (2,000,000 x 12% x 1/12) 20,000
Cash 1,880,000

Apr-01 Trading securities (4,000,000 x 95%) 3,800,000

Interest income (4,000,000 x 12% x 1/12) 40,000
Cash 3,840,000

Aug-01 Cash (2,000,000 x 12% x 6/12) 120,000

Interest income 120,000

Sep-01 Cash (4,000,000 x 12% x 6/12) 240,000

Interest income 240,000

Oct-01 Cash (1,050,000 + 10,000) 1,060,000

Interest income (1,000,000 x 12% x 1/12) 10,000
Trading securities 950,000
Gain on sale of trading securities 100,000

Sales price (1,000,000 x 105%) 1,050,000

Less: Cost of bonds sold (1,000/4,000 x 3,800,000) 950,000
Gain on sale 100,000

Dec-01 Cash (2,000,000 + 80,000) 2,080,000

Trading securities 1,860,000
Interest income (2,000,000 x 12% x 4/12) 80,000 9pts
Gain on sale of trading securities 140,000

Sales price (2,000,000 x 100%) 2,000,000

Less: Cost of bonds sold 1,860,000
Gain on sale 140,000

31 Accrued interest receivable (3,000,000 x 12% x 4/12) 120,000

Interest income 120,000

31 Unrealized loss - TS (2,850,000-2,700,000) 150,000

Trading securities 150,000

Required b
Current assets:
Trading securities at fair value (3,000,000 x 90%) 2,700,000
Bearish Company
Debit Credit
2020
Jul-01 Trading securities 2,200,000
Commission expense 50,000
Interest income (2,000,000 x 4%) 80,000
Cash 2,330,000

Dec-31 Unrealized loss TS 300,000

Trading securities 300,000

Market value (2,000,000 x 95) 1,900,000

Carrying amount 2,200,000
Unrealized loss 300,000

Dec-31 Cash (2,000,000) x 8%) 160,000

Interest income 160,000

2021
Mar-31 Cash 2,140,000
Trading securities 1,900,000
Gain on sale of TS 200,000
Interest income (2,000,000 x 8%) x 3/12) 40,000
Yost Company
Debit Credit
2020
Oct-01 Investment in bonds 4,300,000
Interest income 100,000
Cash 4,400,000

Dec-31 Accrued interest receivable 200,000

Interest income 200,000
(4,000,000 x 10% x 6/12)

31 Interest income 12,000

Investment in bonds 12,000

October 1, 2020 to January 1, 2027 = 75 months

Cost (4,400,000-100,000) 4,300,000

Face value 4,000,000
Premium 300,000

Monthly amortization (300,000/75) 4,000

Amortization from October 1 to December 31, 2019 (4,000 x 3) 12,000

2021
Jan-01 Cash 200,000
Accrued interest receivable 200,000

Jul-01 Cash (4,000,000 10% x 6/12) 200,000

Interest income 200,000

Dec-31 Accrued interest receivable 200,000

Interest income 200,000

31 Interest income (4.000 x 12) 48,000

Investment in bonds 48,000
Manda Company
Debit Credit

2020
May-01 Investment in bonds 5,640,000
Interest income 180,000
Cash 5,820,000

Cost (6,000,000 x 94%) 5,640,000

Accrued interest (6,000,000 x 12% x 3/12) 180,000
Total payment 5,820,000

Aug-01 Cash 360,000

Interest income (6,000,000 x 12% x 6/12) 360,000

Dec-31 Accrued interest receivable 300,000

Interest income (6,000,000 x 12% x 5/12) 300,000

31 Investment in bonds 64,000

Interest income 64,000

May 1, 2020 to February 1, 2024 45 ,months

Monthly amortization (360,000/45) 8,000

May I to December 31, 2017 (8,000 x 8) 64,000

2021
Jan-01 Interest income 300,000
Accrued interest receivable 300,000

Feb-01 Cash (6,000,000 x 12% x 6/12) 360,000

Interest income 360,000

Aug-01 Cash 360,000

Interest income 360,000

Dec-31 Accrued interest receivable 300,000

Interest income 300,000

31 Investment in bonds 96,000

Interest income (8,000 x 12) 96,000

2022
Jan-01 Interest income 300,000
 Accrued interest receivable 300,000

Feb-01 Cash 360,000

Interest income 360,000

May-01 Investment in bonds 32,000

Interest income (8,000 x 4) 32,000

May-01 Cash 6,840,000

Investment in bonds 5,832,000
Interest income 180,000
Gain on sale of bonds 468,000

Sale price (6,000,000 x 105) 6,300,000

Carrying amount 5,832,000
Gain on sale 468,000

Sale price 6,300,000

Accrued interest from February 1 to May 1, 2022 (6,000,000 x 12% x 3/12) 180,000
Total cash received 6,480,000

Cost 5,640,000
Amortization of discount from May 1, 2020 to May 1, 2022 (8,000 x 24) 192,000
Carrying amount 5/1/2021 5,832,000
Flexible Company

Required a Required b
2020
Year Bond outstanding Fraction Amortization Jan-01 Investment in bonds
2020 1,000,000 10/30. 50,000
2021 800,000 8/30. 40,000
2022 600,000 6/30. 30,000 Jun-30 Cash
2023 400,000 4/30. 20,000
2024 200,000 2/30. 10,000
3,000,000 150,000 Dec-31 Cash

31 Interest income
 Debit Credit

Investment in bonds 1,150,000

Cash 1,150,000

60,000
Interest income (1,000,000 x 12% x 6/12) 60,000

60,000
Interest income 60,000

Interest income 50,000

Investment in bonds 50,000
Complex Company

Bond year Bond outstanding Month outstanding Peso month Fraction

1/10/2020 3,000,000 4 12,000,000 12/48.
1/2/2021 2,000,000 12 24,000,000 24/48.
1/2/2022 1,000,000 12 12,000,000 12/48.
48,000,000
 Journal entry for 2020 Debit
Discount amortization
75,000 Oct-01 Investment in bond 2,700,000
150,000 Interest income (3,000,000 x 12% x 2/12) 60,000
75,000 Cash
300,000
Dec-31 Accrued interest receivable 150,000
Interest income (3,000,000 x 12% x 5/12)

31 Investment in bonds 56,250

Interest income (75,000 x 3/4)

Journal entry for 2021

Jan-01 Interest income 150,000
Accrued interest receivable

Feb-01 Cash (3,000,000 x 12% x 6/12) 180,000

Interest income

1 Cash 1,000,000
Investment in bonds

Aug-01 Cash (2,000,000 x 12% x 6/12) 120,000

Interest income

Dec-31 Accrued interest receivable 100,000

Interest income (2,000,000 x 12% x 5/12)

31 Investment in bonds 156,250

Interest income

From Jan1 to Feb1 2021 (75,000 x 1/4)

From Feb1 to Dec31 2021 (150,000 x 11/12)
Total amortization for 2020
 Credit

2,760,000

150,000

56,250

150,000

180,000

1,000,000

120,000

100,000

156,250

18,750
137,500
156,250