SOLUTIONS MANUAL
Corporate Financial Accounting, 16th Edition
By Carl Warren, Jeff Jones
SC
O
R
EG
U
ID
ES
,TABLE OF CONTENT
Chapter 1. Introduction to Accounting and Business
Chapter 2. Analyzing Transactions
Chapter 3. The Adjusting Process
Chapter 4. The Accounting Cycle
SC
Chapter 5. Accounting for Retail Businesses
Chapter 6. Inventories
Chapter 7. Internal Control and Cash
O
Chapter 8. Receivables
Chapter 9. Long-Term Assets: Fixed and Intangible
R
Chapter 10. Liabilities: Current, Installment Notes, and Contingencies
EG
Chapter 11. Liabilities: Bonds Payable
Chapter 12. Corporations: Organization, Stock Transactions, and Dividends
Chapter 13. Statement of Cash Flows
U
Chapter 14. Financial Statement Analysis
ID
ES
, APPENDIX B
SELECTED TOPICS
TOPIC 1: INVESTMENTS
ASSIGNMENTS
B1–1
SC
Held-to-maturity, trading, and available-for-sale securities
B1–2
The primary objective of investing in held-to-maturity securities is to earn
interest revenue and collect the face value of the security at its maturity date.
O
B1–3
Cost method
R
B1–4
Held-to-maturity securities that will mature within one year are reported as
EG
current assets. Securities maturing beyond one year are reported as long-term
assets.
B1–5
a. Investments—Vasquez City Bonds 420,000
U
Interest Receivable 6,300
Cash 426,300
ID
b. Cash ($420,000 × 6% × 1/2) 12,600
Interest Receivable 6,300
Interest Revenue 6,300
c. Cash 208,950*
ES
Loss on Sale of Investments 2,100
Interest Revenue 1,050
Investments—Vasquez City Bonds 210,000
* Sales proceeds ($210,000 × 99%)……………………………………
$207,900
Accrued interest………………………………………………………… 1,050
Total proceeds from sale……………………………………………… $208,950
d. Cash 210,000
Investments—Vasquez City Bonds 210,000
B1-1
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, APPENDIX B Topic 1: Investments
B1–6
a. Investments—Hotline Inc. Bonds 180,000
Interest Receivable 1,500
Cash 181,500
b. Cash ($180,000 × 5% × 1/2) 4,500
Interest Receivable 1,500
Interest Revenue 3,000
SC
c. Cash 92,550 *
Interest Revenue 750
Gain on Sale of Investments 1,800
Investments—Hotline Inc. Bonds 90,000
* Sales proceeds ($90,000 × 102%)……………………………… $91,800
O
Accrued interest…………………………………………………… 750
Total proceeds from sale………………………………………… $92,550
d. Cash 90,000
R
Investments—Hotline Inc. Bonds 90,000
EG
B1–7
a. May 1 Investments—Marimar Co. Bonds 150,000
Cash 150,000
b. Nov. 1 Cash 4,500
Interest Revenue 4,500
$150,000 × 6% × 6/12.
U
c. Nov. 1 Cash ($55,000 × 98%) 53,900
Loss on Sale of Investments 1,100
ID
Investments—Marimar Co. Bonds 55,000
d. Dec. 31 Interest Receivable 950
Interest Revenue 950
Accrued interest [($150,000 –
ES
$55,000) × 6% × 2/12].
B1-2
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Corporate Financial Accounting, 16th Edition
By Carl Warren, Jeff Jones
SC
O
R
EG
U
ID
ES
,TABLE OF CONTENT
Chapter 1. Introduction to Accounting and Business
Chapter 2. Analyzing Transactions
Chapter 3. The Adjusting Process
Chapter 4. The Accounting Cycle
SC
Chapter 5. Accounting for Retail Businesses
Chapter 6. Inventories
Chapter 7. Internal Control and Cash
O
Chapter 8. Receivables
Chapter 9. Long-Term Assets: Fixed and Intangible
R
Chapter 10. Liabilities: Current, Installment Notes, and Contingencies
EG
Chapter 11. Liabilities: Bonds Payable
Chapter 12. Corporations: Organization, Stock Transactions, and Dividends
Chapter 13. Statement of Cash Flows
U
Chapter 14. Financial Statement Analysis
ID
ES
, APPENDIX B
SELECTED TOPICS
TOPIC 1: INVESTMENTS
ASSIGNMENTS
B1–1
SC
Held-to-maturity, trading, and available-for-sale securities
B1–2
The primary objective of investing in held-to-maturity securities is to earn
interest revenue and collect the face value of the security at its maturity date.
O
B1–3
Cost method
R
B1–4
Held-to-maturity securities that will mature within one year are reported as
EG
current assets. Securities maturing beyond one year are reported as long-term
assets.
B1–5
a. Investments—Vasquez City Bonds 420,000
U
Interest Receivable 6,300
Cash 426,300
ID
b. Cash ($420,000 × 6% × 1/2) 12,600
Interest Receivable 6,300
Interest Revenue 6,300
c. Cash 208,950*
ES
Loss on Sale of Investments 2,100
Interest Revenue 1,050
Investments—Vasquez City Bonds 210,000
* Sales proceeds ($210,000 × 99%)……………………………………
$207,900
Accrued interest………………………………………………………… 1,050
Total proceeds from sale……………………………………………… $208,950
d. Cash 210,000
Investments—Vasquez City Bonds 210,000
B1-1
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, APPENDIX B Topic 1: Investments
B1–6
a. Investments—Hotline Inc. Bonds 180,000
Interest Receivable 1,500
Cash 181,500
b. Cash ($180,000 × 5% × 1/2) 4,500
Interest Receivable 1,500
Interest Revenue 3,000
SC
c. Cash 92,550 *
Interest Revenue 750
Gain on Sale of Investments 1,800
Investments—Hotline Inc. Bonds 90,000
* Sales proceeds ($90,000 × 102%)……………………………… $91,800
O
Accrued interest…………………………………………………… 750
Total proceeds from sale………………………………………… $92,550
d. Cash 90,000
R
Investments—Hotline Inc. Bonds 90,000
EG
B1–7
a. May 1 Investments—Marimar Co. Bonds 150,000
Cash 150,000
b. Nov. 1 Cash 4,500
Interest Revenue 4,500
$150,000 × 6% × 6/12.
U
c. Nov. 1 Cash ($55,000 × 98%) 53,900
Loss on Sale of Investments 1,100
ID
Investments—Marimar Co. Bonds 55,000
d. Dec. 31 Interest Receivable 950
Interest Revenue 950
Accrued interest [($150,000 –
ES
$55,000) × 6% × 2/12].
B1-2
© 2022 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
