Rantzow - Lear Company buys and sells debt securitiesexpecting to earn profits on short-term differences inprice, and holds these investments in its tradingportfolio. The company's fiscal year ends on December31. The following selected transactions relating toRantzow - Lear's trading account occurred duringDecember 2024 and the first week of 2025. December17, 2024 Purchased 195 Grocers' Supply Corporationbonds at par for $487,500. December 28, 2024Received interest of $5,800 from the Grocers' SupplyCorporation bonds. December 31, 2024 Recorded anynecessary adjusting entry relating to the Grocers'Supply Corporation bonds. The market price of thebond was $3,000 per bond. January 5, 2025 Sold theGrocers' Supply Corporation bonds for $546,000.Required: Prepare the appropriate journal entry orentries for each transaction. Indicate any amounts thatRantzow - Lear Company would report in its 2024balance sheet and income statement as a result of thisinvestment. Ignore income taxes.

1. December 17, 2024: Purchase of BondsTransaction: Purchased 195 Grocers' Supply Corporation bonds…

Answered: Rantzow - Lear Company buys and sells…

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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The Gorman Group issued $930,000 of 11% bonds on June 30, 2021, for $1,009,794. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually on December 31 and June 30. Required: 1.to3. Prepare the journal entries to record their issuance by The Gorman Group on Jun 30, 2021, interest on December 31, 2021, and interest on June 30, 2022 (at the effective rate). Record the issuance of the bond on June 30, 2021. Record the interest on December 31, 2021 (at the effective rate). Record the interest on June 30, 2022 (at the effective rate).
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P2.5 (LO 1, 2, 3, 4), AP The Starr Theater, owned by Meg Vargo, will begin operations in March. The Starr will be unique in that it will show only triple features of sequential theme movies. As of March 1, the ledger of Starr showed No. 101 Cash $3,000, No. 140 Land $24,000, No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $10,000, No. 157 Equipment $10,000, No. 201 Accounts Payable $7,000, and No. 301 Owner’s Capital $40,000. During the month of March, the following events and transactions occurred. Mar. 2 Rented the three Indiana Jones movies to be shown for the first 3 weeks of March. The film rental was $3,500; $1,500 was paid in cash and $2,000 will be paid on March 10. 3 Ordered the Lord of the Rings movies to be shown in the last 10 days of March. It will cost $200 per night. 9 Received $4,300 cash from admissions. 10 Paid balance due on Indiana Jones movies rental and $2,100 on March 1 accounts payable. 11 Starr Theater contracted with…
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