Shamrock Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Shamrock to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000.

Prepare Shamrock’s journal entries related to this investment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the purchase.)

   
     
     

(To record the net income.)

   
     
     

(To record the dividend.)

   

 

 

Windsor Company invests $10,100,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,675,000. Interest is paid on January 1.

Prepare journal entries for Windsor Company to (a) record the transactions related to these bonds in 2017, assuming Windsor does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Windsor Company elects the fair value option to account for these bonds.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

 

No.

Date

Account Titles and Explanation

Debit

Credit

(b)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

 

Brief Exercise 17-13

Presented below are two independent cases related to available-for-sale debt investments.

   

Case 1

 

Case 2

Amortized cost

 

$36,310

 

$105,500

Fair value

 

27,230

 

114,530

Expected credit losses

 

22,700

 

98,260


For each case, determine the amount of impairment loss, if any.  (If no loss, please enter 0. Do not leave any fields blank.)

Case 1

   

Impairment Loss

 

$

 

 

Case 2

   

Impairment Loss

 

$

 

 

The following are two independent situations.

Situation 1
Bramble Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2
Sunland, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,400. On December 31, Seles reported a net income of $91,800 for the year.

Prepare all necessary journal entries in 2017 for both situations.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Situation 1: Bramble Cosmetics

       
       
       
       
       
       

Situation 2: Sunland, Inc

       
       
       
       
       
       

 

 

 

 

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

   

 

 

 

 

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         

 

 

 

 

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         

 

 

 

 

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

 

 

On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $684. The notional value of the call option is 760 shares, and the option price is $76. The option expires on January 31, 2017. The following data are available with respect to the call option.


Date

 

Market Price of Counting
Crows Shares

 

Time Value of Call
Option

September 30, 2016

 

$91 per share

 

$342

December 31, 2016

 

$87 per share

 

124

January 15, 2017

 

$89 per share

 

57


Prepare the journal entries for Splish for the following dates.

(a)

 

Investment in call option on Counting Crows shares on August 15, 2016.

(b)

 

September 30, 2016—Splish prepares financial statements.

(c)

 

December 31, 2016—Splish prepares financial statements.

(d)

 

January 15, 2017—Splish settles the call option on the Counting Crows shares.


(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         

(b)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(c)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(d)

       
         
   

(To record the time value change.)

   
         
         
         

 

Shamrock Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Shamrock to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000.

Prepare Shamrock’s journal entries related to this investment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the purchase.)

   
     
     

(To record the net income.)

   
     
     

(To record the dividend.)

   

 

 

Windsor Company invests $10,100,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,675,000. Interest is paid on January 1.

Prepare journal entries for Windsor Company to (a) record the transactions related to these bonds in 2017, assuming Windsor does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Windsor Company elects the fair value option to account for these bonds.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

 

No.

Date

Account Titles and Explanation

Debit

Credit

(b)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

 

Brief Exercise 17-13

Presented below are two independent cases related to available-for-sale debt investments.

   

Case 1

 

Case 2

Amortized cost

 

$36,310

 

$105,500

Fair value

 

27,230

 

114,530

Expected credit losses

 

22,700

 

98,260


For each case, determine the amount of impairment loss, if any.  (If no loss, please enter 0. Do not leave any fields blank.)

Case 1

   

Impairment Loss

 

$

 

 

Case 2

   

Impairment Loss

 

$

 

 

The following are two independent situations.

Situation 1
Bramble Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2
Sunland, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,400. On December 31, Seles reported a net income of $91,800 for the year.

Prepare all necessary journal entries in 2017 for both situations.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Situation 1: Bramble Cosmetics

       
       
       
       
       
       

Situation 2: Sunland, Inc

       
       
       
       
       
       

 

 

 

 

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

   

 

 

 

 

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         

 

 

 

 

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         

 

 

 

 

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

 

 

On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $684. The notional value of the call option is 760 shares, and the option price is $76. The option expires on January 31, 2017. The following data are available with respect to the call option.


Date

 

Market Price of Counting
Crows Shares

 

Time Value of Call
Option

September 30, 2016

 

$91 per share

 

$342

December 31, 2016

 

$87 per share

 

124

January 15, 2017

 

$89 per share

 

57


Prepare the journal entries for Splish for the following dates.

(a)

 

Investment in call option on Counting Crows shares on August 15, 2016.

(b)

 

September 30, 2016—Splish prepares financial statements.

(c)

 

December 31, 2016—Splish prepares financial statements.

(d)

 

January 15, 2017—Splish settles the call option on the Counting Crows shares.


(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         

(b)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(c)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(d)

       
         
   

(To record the time value change.)

   
         
         
         

 

Shamrock Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Shamrock to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000.

Prepare Shamrock’s journal entries related to this investment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the purchase.)

   
     
     

(To record the net income.)

   
     
     

(To record the dividend.)

   

 

 

Windsor Company invests $10,100,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,675,000. Interest is paid on January 1.

Prepare journal entries for Windsor Company to (a) record the transactions related to these bonds in 2017, assuming Windsor does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Windsor Company elects the fair value option to account for these bonds.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

 

No.

Date

Account Titles and Explanation

Debit

Credit

(b)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

 

Brief Exercise 17-13

Presented below are two independent cases related to available-for-sale debt investments.

   

Case 1

 

Case 2

Amortized cost

 

$36,310

 

$105,500

Fair value

 

27,230

 

114,530

Expected credit losses

 

22,700

 

98,260


For each case, determine the amount of impairment loss, if any.  (If no loss, please enter 0. Do not leave any fields blank.)

Case 1

   

Impairment Loss

 

$

 

 

Case 2

   

Impairment Loss

 

$

 

 

The following are two independent situations.

Situation 1
Bramble Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2
Sunland, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,400. On December 31, Seles reported a net income of $91,800 for the year.

Prepare all necessary journal entries in 2017 for both situations.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Situation 1: Bramble Cosmetics

       
       
       
       
       
       

Situation 2: Sunland, Inc

       
       
       
       
       
       

 

 

 

 

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

   

 

 

 

 

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         

 

 

 

 

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         

 

 

 

 

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

 

 

On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $684. The notional value of the call option is 760 shares, and the option price is $76. The option expires on January 31, 2017. The following data are available with respect to the call option.


Date

 

Market Price of Counting
Crows Shares

 

Time Value of Call
Option

September 30, 2016

 

$91 per share

 

$342

December 31, 2016

 

$87 per share

 

124

January 15, 2017

 

$89 per share

 

57


Prepare the journal entries for Splish for the following dates.

(a)

 

Investment in call option on Counting Crows shares on August 15, 2016.

(b)

 

September 30, 2016—Splish prepares financial statements.

(c)

 

December 31, 2016—Splish prepares financial statements.

(d)

 

January 15, 2017—Splish settles the call option on the Counting Crows shares.


(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         

(b)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(c)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(d)

       
         
   

(To record the time value change.)

   
         
         
         

 

Shamrock Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Shamrock to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000.

Prepare Shamrock’s journal entries related to this investment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Shamrock Corporation purchased for $288,000 a 25% interest in Murphy, Inc. This investment enables Shamrock to exert significant influence over Murphy. During the year, Murphy earned net income of $173,000 and paid dividends of $54,000.

Prepare Shamrock’s journal entries related to this investment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the purchase.)

   
     
     

(To record the net income.)

   
     
     

(To record the dividend.)

   

Account Titles and Explanation

Debit

Credit

     
     

(To record the purchase.)

   
     
     

(To record the net income.)

   
     
     

(To record the dividend.)

   

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation

Debit

Debit Debit Debit Debit

Credit

Credit Credit Credit Credit

                 
                 

(To record the purchase.)

   

(To record the purchase.)

(To record the purchase.) (To record the purchase.)

       
                 
                 

(To record the net income.)

   

(To record the net income.)

(To record the net income.) (To record the net income.)

       
                 
                 

(To record the dividend.)

   

(To record the dividend.)

(To record the dividend.) (To record the dividend.)

       

   

   

Windsor Company invests $10,100,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,675,000. Interest is paid on January 1.

Prepare journal entries for Windsor Company to (a) record the transactions related to these bonds in 2017, assuming Windsor does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Windsor Company elects the fair value option to account for these bonds.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Windsor Company invests $10,100,000 in 5% fixed rate corporate bonds on January 1, 2017. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,675,000. Interest is paid on January 1.

Prepare journal entries for Windsor Company to (a) record the transactions related to these bonds in 2017, assuming Windsor does not elect the fair option; and (b) record the transactions related to these bonds in 2017, assuming that Windsor Company elects the fair value option to account for these bonds.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

No.

Date

Account Titles and Explanation

Debit

Credit

No.

No. No. No. No.

Date

Date Date Date Date

Account Titles and Explanation

Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation

Debit

Debit Debit Debit Debit

Credit

Credit Credit Credit Credit

(a)

       

(a)

(a) (a) (a) (a)

               
                             
                             
                             
   

(To record interest revenue)

           

(To record interest revenue)

(To record interest revenue) (To record interest revenue)

       
                             
                             
   

(To record fair value adjustment)

           

(To record fair value adjustment)

(To record fair value adjustment) (To record fair value adjustment)

       

   

No.

Date

Account Titles and Explanation

Debit

Credit

(b)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

No.

Date

Account Titles and Explanation

Debit

Credit

(b)

       
         
         
         
   

(To record interest revenue)

   
         
         
   

(To record fair value adjustment)

   

No.

Date

Account Titles and Explanation

Debit

Credit

No.

No. No. No. No.

Date

Date Date Date Date

Account Titles and Explanation

Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation

Debit

Debit Debit Debit Debit

Credit

Credit Credit Credit Credit

(b)

       

(b)

(b) (b) (b) (b)

               
                             
                             
                             
   

(To record interest revenue)

           

(To record interest revenue)

(To record interest revenue) (To record interest revenue)

       
                             
                             
   

(To record fair value adjustment)

           

(To record fair value adjustment)

(To record fair value adjustment) (To record fair value adjustment)

       

   

Brief Exercise 17-13 Brief Exercise 17-13 Brief Exercise 17-13 Brief Exercise 17-13

Presented below are two independent cases related to available-for-sale debt investments. Presented below are two independent cases related to available-for-sale debt investments.

   

Case 1

 

Case 2

Amortized cost

 

$36,310

 

$105,500

Fair value

 

27,230

 

114,530

Expected credit losses

 

22,700

 

98,260

   

Case 1

 

Case 2

Amortized cost

 

$36,310

 

$105,500

Fair value

 

27,230

 

114,530

Expected credit losses

 

22,700

 

98,260

   

Case 1

 

Case 2

       

Case 1

Case 1 Case 1 Case 1 Case 1

   

Case 2

Case 2 Case 2 Case 2 Case 2

Amortized cost

 

$36,310

 

$105,500

Amortized cost

Amortized cost Amortized cost

   

$36,310

$36,310 $36,310

   

$105,500

$105,500 $105,500

Fair value

 

27,230

 

114,530

Fair value

Fair value Fair value

   

27,230

27,230 27,230

   

114,530

114,530 114,530

Expected credit losses

 

22,700

 

98,260

Expected credit losses

Expected credit losses Expected credit losses

   

22,700

22,700 22,700

   

98,260

98,260 98,260


For each case, determine the amount of impairment loss, if any.  (If no loss, please enter 0. Do not leave any fields blank.)
For each case, determine the amount of impairment loss, if any.  (If no loss, please enter 0. Do not leave any fields blank.)
For each case, determine the amount of impairment loss, if any. 
(If no loss, please enter 0. Do not leave any fields blank.) (If no loss, please enter 0. Do not leave any fields blank.) (If no loss, please enter 0. Do not leave any fields blank.)

Case 1

   

Impairment Loss

 

$

 

Case 1

   

Impairment Loss

 

$

 

Case 1

   

Case 1

Case 1 Case 1 Case 1 Case 1 Case 1

       

Impairment Loss

 

$

 

Impairment Loss

Impairment Loss Impairment Loss

   

$

 

$ $

   

   

Case 2

   

Impairment Loss

 

$

 

Case 2

   

Impairment Loss

 

$

 

Case 2

   

Case 2

Case 2 Case 2 Case 2 Case 2 Case 2

       

Impairment Loss

 

$

 

Impairment Loss

Impairment Loss Impairment Loss

   

$

 

$ $

   

   

The following are two independent situations.

Situation 1
Bramble Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2
Sunland, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,400. On December 31, Seles reported a net income of $91,800 for the year.

Prepare all necessary journal entries in 2017 for both situations.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

The following are two independent situations.

Situation 1
Bramble Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2
Sunland, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,400. On December 31, Seles reported a net income of $91,800 for the year.

Prepare all necessary journal entries in 2017 for both situations.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

The following are two independent situations.

Situation 1
Bramble Cosmetics acquired 10% of the 215,000 shares of common stock of Martinez Fashion at a total cost of $12 per share on March 18, 2017. On June 30, Martinez declared and paid $74,400 cash dividend to all stockholders. On December 31, Martinez reported net income of $133,600 for the year. At December 31, the market price of Martinez Fashion was $13 per share.

Situation 2
Sunland, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles’s 28,500 outstanding shares of common stock at a total cost of $9 per share on January 1, 2017. On June 15, Seles declared and paid cash dividends of $35,400. On December 31, Seles reported a net income of $91,800 for the year.

Prepare all necessary journal entries in 2017 for both situations. 

Situation 1


Situation 2


(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)



Date

Account Titles and Explanation

Debit

Credit

Situation 1: Bramble Cosmetics

       
       
       
       
       
       

Situation 2: Sunland, Inc

       
       
       
       
       
       

Date

Account Titles and Explanation

Debit

Credit

Situation 1: Bramble Cosmetics

       
       
       
       
       
       

Situation 2: Sunland, Inc

       
       
       
       
       
       

Date

Account Titles and Explanation

Debit

Credit

Date

Date Date Date Date

Account Titles and Explanation

Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation

Debit

Debit Debit Debit Debit

Credit

Credit Credit Credit Credit

Situation 1: Bramble Cosmetics

Situation 1: Bramble Cosmetics

Situation 1: Bramble Cosmetics Situation 1: Bramble Cosmetics Situation 1: Bramble Cosmetics Situation 1: Bramble Cosmetics Situation 1: Bramble Cosmetics

                       
                       
                       
                       
                       
                       

Situation 2: Sunland, Inc

Situation 2: Sunland, Inc

Situation 2: Sunland, Inc Situation 2: Sunland, Inc Situation 2: Sunland, Inc Situation 2: Sunland, Inc Situation 2: Sunland, Inc

                       
                       
                       
                       
                       
                       

   

   

   

   

   

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

   

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

   

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

   

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 

Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds. Pina Corporation has municipal bonds classified as a held-to-maturity at December 31, 2017. These bonds have a par value of $876,000, an amortized cost of $876,000, and a fair value of $795,000. The company believes that impairment accounting is now appropriate for these bonds.

 
 
         

   

 
 
     

   

 

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         
 

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         
 

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

             

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Prepare the journal entry to recognize the impairment.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 

Account Titles and Explanation

Debit

Credit

     
     

(To record the impairment.)

   
 

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation

Debit

Debit Debit Debit Debit

Credit

Credit Credit Credit Credit

                 
                 

(To record the impairment.)

   

(To record the impairment.)

(To record the impairment.) (To record the impairment.)

       
     




SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

SHOW LIST OF ACCOUNTS

SHOW LIST OF ACCOUNTS

SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

LINK TO TEXT

LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT

                   

   

 
 
     

   

 

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         
 

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

         
 

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

             

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

 

 


SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

What is the new cost basis of the municipal bonds? What is the new cost basis of the municipal bonds?

New cost basis of the municipal bonds

 

$

 

New cost basis of the municipal bonds

 

$

 

New cost basis of the municipal bonds

 

$

 

New cost basis of the municipal bonds

New cost basis of the municipal bonds New cost basis of the municipal bonds

   

$

 

$ $

   


Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?
Given that the maturity value of the bonds is $876,000, should Pina Corporation amortize the difference between the carrying amount and the maturity value over the life of the bonds?

   

 
 
     




SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

SHOW LIST OF ACCOUNTS

SHOW LIST OF ACCOUNTS

SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS SHOW LIST OF ACCOUNTS

LINK TO TEXT

       

LINK TO TEXT

LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT

                   

   

 
 
     

   

 

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     
 

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     
 

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
         

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) At December 31, 2018, the fair value of the municipal bonds is $831,000. Prepare the entry (if any) to record this information.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

     
     

Account Titles and Explanation

Debit

Credit

     
     

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation

Debit

Debit Debit Debit Debit

Credit

Credit Credit Credit Credit

                 
                 

   

   

On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $684. The notional value of the call option is 760 shares, and the option price is $76. The option expires on January 31, 2017. The following data are available with respect to the call option.

On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $684. The notional value of the call option is 760 shares, and the option price is $76. The option expires on January 31, 2017. The following data are available with respect to the call option.

On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $684. The notional value of the call option is 760 shares, and the option price is $76. The option expires on January 31, 2017. The following data are available with respect to the call option.




Date

 

Market Price of Counting
Crows Shares

 

Time Value of Call
Option

September 30, 2016

 

$91 per share

 

$342

December 31, 2016

 

$87 per share

 

124

January 15, 2017

 

$89 per share

 

57


Date

 

Market Price of Counting
Crows Shares

 

Time Value of Call
Option

September 30, 2016

 

$91 per share

 

$342

December 31, 2016

 

$87 per share

 

124

January 15, 2017

 

$89 per share

 

57


Date

 

Market Price of Counting
Crows Shares

 

Time Value of Call
Option


Date


Date
Date
Date

   

Market Price of Counting
Crows Shares

Market Price of Counting
Crows Shares Market Price of Counting
Crows Shares Market Price of Counting
Crows Shares Market Price of Counting
Crows Shares

   

Time Value of Call
Option

Time Value of Call
Option Time Value of Call
Option Time Value of Call
Option Time Value of Call
Option

September 30, 2016

 

$91 per share

 

$342

September 30, 2016

September 30, 2016 September 30, 2016

   

$91 per share

$91 per share $91 per share

   

$342

$342 $342

December 31, 2016

 

$87 per share

 

124

December 31, 2016

December 31, 2016 December 31, 2016

   

$87 per share

$87 per share $87 per share

   

124

124 124

January 15, 2017

 

$89 per share

 

57

January 15, 2017

January 15, 2017 January 15, 2017

   

$89 per share

$89 per share $89 per share

   

57

57 57


Prepare the journal entries for Splish for the following dates.


Prepare the journal entries for Splish for the following dates.




(a)

 

Investment in call option on Counting Crows shares on August 15, 2016.

(b)

 

September 30, 2016—Splish prepares financial statements.

(c)

 

December 31, 2016—Splish prepares financial statements.

(d)

 

January 15, 2017—Splish settles the call option on the Counting Crows shares.

(a)

 

Investment in call option on Counting Crows shares on August 15, 2016.

(b)

 

September 30, 2016—Splish prepares financial statements.

(c)

 

December 31, 2016—Splish prepares financial statements.

(d)

 

January 15, 2017—Splish settles the call option on the Counting Crows shares.

(a)

 

Investment in call option on Counting Crows shares on August 15, 2016.

(a)

(a) (a) (a) (a)

   

Investment in call option on Counting Crows shares on August 15, 2016.

Investment in call option on Counting Crows shares on August 15, 2016. Investment in call option on Counting Crows shares on August 15, 2016.

(b)

 

September 30, 2016—Splish prepares financial statements.

(b)

(b) (b) (b) (b)

   

September 30, 2016—Splish prepares financial statements.

September 30, 2016—Splish prepares financial statements. September 30, 2016—Splish prepares financial statements.

(c)

 

December 31, 2016—Splish prepares financial statements.

(c)

(c) (c) (c) (c)

   

December 31, 2016—Splish prepares financial statements.

December 31, 2016—Splish prepares financial statements. December 31, 2016—Splish prepares financial statements.

(d)

 

January 15, 2017—Splish settles the call option on the Counting Crows shares.

(d)

(d) (d) (d) (d)

   

January 15, 2017—Splish settles the call option on the Counting Crows shares.

January 15, 2017—Splish settles the call option on the Counting Crows shares. January 15, 2017—Splish settles the call option on the Counting Crows shares.


(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)


(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)



(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)



No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         

(b)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(c)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(d)

       
         
   

(To record the time value change.)

   
         
         
         

No.

Date

Account Titles and Explanation

Debit

Credit

(a)

       
         

(b)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(c)

       
         
   

(To record the change in intrinsic value.)

   
         
         
   

(To record the time value change.)

   

(d)

       
         
   

(To record the time value change.)

   
         
         
         

No.

Date

Account Titles and Explanation

Debit

Credit

No.

No. No. No. No.

Date

Date Date Date Date

Account Titles and Explanation

Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation Account Titles and Explanation

Debit

Debit Debit Debit Debit

Credit

Credit Credit Credit Credit

(a)

       

(a)

(a) (a)

               
                             

(b)

       

(b)

(b) (b)

               
                             
   

(To record the change in intrinsic value.)

           

(To record the change in intrinsic value.)

(To record the change in intrinsic value.) (To record the change in intrinsic value.)

       
                             
                             
   

(To record the time value change.)

           

(To record the time value change.)

(To record the time value change.) (To record the time value change.)

       

(c)

       

(c)

(c) (c)

               
                             
   

(To record the change in intrinsic value.)

           

(To record the change in intrinsic value.)

(To record the change in intrinsic value.) (To record the change in intrinsic value.)

       
                             
                             
   

(To record the time value change.)

           

(To record the time value change.)

(To record the time value change.) (To record the time value change.)

       

(d)

       

(d)

(d) (d)

               
                             
   

(To record the time value change.)

           

(To record the time value change.)

(To record the time value change.) (To record the time value change.)

       
                             
                             
                             

   

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