Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in...
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Rantzow-Lear Company buys and sells debt securities expecting to earn profits on short-term differences in price. The companys fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lears trading account occurred during December 2018 and the first week of 2019.
1. Prepare the appropriate journal entry or entries for each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
2. Indicate any amounts that Rantzow-Lear Company would report in its 2018 balance sheet and income statement as a result of this investment.
2018
Dec.
17
Purchased 160 Grocers' Supply Corporation bonds for $560,000.
28
Received interest of $4,400 from the Grocers Supply Corporation bonds.
31
Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation bonds. The market price of the bonds were $4,000 per bond.
2019
Jan.
5
Sold the Grocers' Supply Corporation bonds for $624,000.
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