Husky Corporation is a general contractor which occasionally invests excess cash in debt securities. The following transactions took place in the fourth quarter of 2021.On October 1, 2021, purchased $6 million of 3% Microsoft bonds at par value. These bonds pay interest on June 30 and December 31 of each year, and were classified as Held to Maturity (“HTM”).On November 1, 2021, purchased $3 million of 4% Amazon bonds at par value. These bonds pay interest on September 30 and March 31 of each year, and were classified as Available for Sale (“AFS”)On December 1, 2021, purchased $2 million of 3% US Treasury Bonds at par value, hoping to earn profits on short-term price increases driven by a decline in interest rates. These bonds were classified as Trading Securities. (“TS”)On December 31, 2021, received the interest payment ($45,000) on the Microsoft bonds purchased on October 1.Requirements:Prepare journal entries for the transactions in a. through d. above.Prepare journal entries to accrue any interest receivable on the Amazon and US Treasury bonds at December 31, 2021Assume that each of these investments increased by 10% between the time it was purchased, and December 31, 2021. Prepare any journal entries necessary to record unrealized gain as of December 31, 2021.Prepare a short table that shows that impact of the above transactions for 2021 onNet IncomeOther Comprehensive Income, and Comprehensive Income

Journal Entries in the book of Accounts of Husky Corporation. Date Particulars Ref. Debit ($)…

Answered: Husky Corporation is a general…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Husky Corporation is a general contractor which occasionally invests excess cash in debt securities. The following transactions took place in the fourth quarter of 2021.

On October 1, 2021, purchased $6 million of 3% Microsoft bonds at par value. These bonds pay interest on June 30 and December 31 of each year, and were classified as Held to Maturity (“HTM”).
On November 1, 2021, purchased $3 million of 4% Amazon bonds at par value. These bonds pay interest on September 30 and March 31 of each year, and were classified as Available for Sale (“AFS”)
On December 1, 2021, purchased $2 million of 3% US Treasury Bonds at par value, hoping to earn profits on short-term price increases driven by a decline in interest rates. These bonds were classified as Trading Securities. (“TS”)
On December 31, 2021, received the interest payment ($45,000) on the Microsoft bonds purchased on October 1.

Requirements:

Prepare journal entries for the transactions in a. through d. above.
Prepare journal entries to accrue any interest receivable on the Amazon and US Treasury bonds at December 31, 2021
Assume that each of these investments increased by 10% between the time it was purchased, and December 31, 2021. Prepare any journal entries necessary to record unrealized gain as of December 31, 2021.
Prepare a short table that shows that impact of the above transactions for 2021 on
1. Net Income
2. Other Comprehensive Income, and
3. Comprehensive Income

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