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·(d) Bonds that will mature in 5 years are purchased. The company
would like to hold them until they mature, but money has been tight
recently and they may need to be sold.
·(e) A bond that matures in 10 years was purchased. The company is
investing money set aside for an expansion project planned 10 years
from now.
(f) Preferred stock was purchased for its constant dividend. The
company is planning to hold the preferred stock for a long time
E17-2 (Entries for Held-to-Maturity Securities) On January 1, 2012,
Jennings Company purchased at par 10% bonds having a maturity
value of $300,000. They are dated January 1, 2012, and mature
January 1, 2017, with interest receivable December 31 of each year.
The bonds are classified in the held-to-maturity category.
E17-9 (Available-for-Sale Securities Entries and Financial Statement
Presentation) At
E17-12 (Journal Entries for Fair Value and Equity Methods)Presented
on page 1032 are two independent situations.
E17-16 (Fair Value and Equity Method Compared) Gregory Inc.
acquired 20% of the outstanding common stock of Handerson Inc. on
December 31, 2012. The purchase price was $1,250,000 for 50,000
shares. Handerson Inc. declared and paid an $0.80 per share cash
dividend on June 30 and on December 31, 2013. Handerson reported
net income of $730,000 for 2013. The fair value of Handerson’s stock
was $27 per share at December 31, 2013.
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ACCT 551 Week 7 Homework
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