Reference no: EM132528133

Question - Cheese Farms is a grower of hybrid seed corn for Steenbergen Genetics Limited. It has had two exceptionally good years and has elected to invest its excess funds in bonds. The selected transactions, shown below, relate to bonds acquired as an investment by Cheese Farms, whose fi scal year ends on December 31.

2017 -

Jan. 1 Purchased at face value £400,000 of Stombaugh Corporation 10-year, 6% bonds dated January 1, 2017, directly from the issuing corporation.

Dec. 31 Accrual of interest at year-end on the Stombaugh bonds. Interest is paid on January 1 of each year.

(Assume that all intervening transactions and adjustments have been properly recorded and the number of bonds owned has not changed from December 31, 2017, to December 31, 2019.)

2020

Jan. 1 Received the annual interest on the Stombaugh bonds.

Jan. 1 Sold £240,000 of Stombaugh bonds at 112.

Dec. 31 Accrual of interest at year-end on the Stombaugh bonds.

Instructions -

(a) Journalize the listed transactions for the years 2017 and 2020.

(b) Show the statement of financial position presentation of the bonds and interest receivable at December 31, 2017. Assume the investments are considered long-term.