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Prepare the appropriate journal entry for each transaction

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Reference no: EM132315346

Question

Joshua Skateboarding Corporation engaged in the following investment activities during 2019. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Joshua's fiscal year ends on December 31. No investments were held by Joshua on December 31, 2018.

March 31 Acquired 8% Skate Park Company bonds costing $400,000 at face value.

Sept. 1 Acquired $900,000 of Board Wheels Inc. 10% bonds at face value.

Sept. 30 Received semiannual interest payment on the Skate Park Company bonds.

Oct. 2 Sold Skate Park Company bonds for $425,000.

Nov. 1 Purchased $1,400,000 of Snoopy Boards 6% bonds at face value.

Dec. 31 Recorded any necessary adjusting entry(s) relating to the investments.

The market prices of the investments are:

Board Wheels bonds $ 850,000

Snoopy Boards bonds $1,460,000

Required:

1. Prepare the appropriate journal entry for each transaction or event during 2019, as well as any adjusting entries necessary at year end. You may assume that all investment pay interest semi-annually.

2. Indicate any amounts that Joshua Skateboarding would report in its 2019 income statement, 2019 statement of comprehensive income, and 12/31/2019 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments.

Reference no: EM132315346

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