Using the following information, prepare journal entries for the year 2014

| March 31, 2017

Question
DEBT SECURITIES

2.Using the following information, prepare journal entries for the year 2014 and indicate how ABC should report its investment in its year end financial statements:

•the investment is considered Held to maturity.

• On July 1, 2014 ABC purchased $4,000,000 of XYZ’s 8% bonds, due on July 1, 2021.

• The bonds, which pay interest semiannually on January 1 and July 1, were purchased for $3,500,000 to yield 10%.

• The fair value at December 31, 2014 is $3,604,000.

3.Using information on problem 2, prepare journal entries for the year 2014 but assuming the investment is considered Trading securities. Also, indicate how ABC should report its investment in its year end financial statements

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