Accounting for debt investments On February 1, 2018, Bell Co. decides to invest excess cash of $16,800 by purchasing a Grant, Inc. bond at face value. At year-end, December 31, 2018, the fair value of the Grant bond was $19,600. The investment is categorized as a trading debt investment. Requirements Journalize the transactions for Bell’s investment in Grant, Inc. for 2018. In what category and at what value would Bell report the asset on the December 31, 2018, balance sheet? In what account would the market price change in Grant’s bond be reported, if at all? What was the net effect of the investment on Bell’s net income for the year ended December 31, 2018?
Accounting for debt investments On February 1, 2018, Bell Co. decides to invest excess cash of $16,800 by purchasing a Grant, Inc. bond at face value. At year-end, December 31, 2018, the fair value of the Grant bond was $19,600. The investment is categorized as a trading debt investment. Requirements Journalize the transactions for Bell’s investment in Grant, Inc. for 2018. In what category and at what value would Bell report the asset on the December 31, 2018, balance sheet? In what account would the market price change in Grant’s bond be reported, if at all? What was the net effect of the investment on Bell’s net income for the year ended December 31, 2018?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accounting for debt investments
On February 1, 2018, Bell Co. decides to invest excess cash of $16,800 by purchasing a Grant, Inc. bond at face value. At year-end, December 31, 2018, the fair value of the Grant bond was $19,600. The investment is categorized as a trading debt investment.
Requirements
- Journalize the transactions for Bell’s investment in Grant, Inc. for 2018.
- In what category and at what value would Bell report the asset on the December 31, 2018,
balance sheet ? In what account would the market price change in Grant’s bond be reported, if at all? - What was the net effect of the investment on Bell’s net income for the year ended December 31, 2018?
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