Prepare the entries necessary to correct

Reference no: EM132967167

Question: Bridgeport Corp. prepares financial statements annually on December 31, its fiscal year end. The company follows IFRS. At December 31, 2020, the company has the account Investments in its general ledger, containing the following debits for investment purchases, and no credits:

Feb. 1, 2020. Chiang Corp. common shares, no par value, 200 shares --- $39,600

April 1. Government of Canada bonds, 6%, due April 1, 2030, interest payable April 1 and October 1, 100 bonds of $1,000 par value each ----$100,000

July 1. Monet Corp. 12% bonds, par $63,000, dated March 1, 2020, purchased at 108 plus accrued interest to yield 11%, interest payable annually on March 1, due on March 1, 2037. ---$70,560

Nov. 1. $73,000, six-month non-interest-bearing note that matures on May 1, 2021, bought to yield 10% ----$69,524

The fair values of the individual securities on December 31, 2020, were:

Chiang Corp. common shares (active stock market price) $34,500
Government of Canada bonds. 106,300
Monet Corp. bonds. 71,000
Note receivable. 70,550

prepare the entries necessary to correct any errors in the Investments account, assuming that the Government of Canada bonds were being managed for their yield to maturity, and that the Monet bonds were acquired with the hope of gaining from falling interest rates. The Chiang Corp. shares were acquired with the hope of ensuring the supply of raw materials from this company in the future. Bridgeport tracks interest income for all debt investments.

Reference no: EM132967167

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