Reference no: EM133189975
Question - The following information relates to the debt securities investments of Wild Company:
1. On February 1, the company purchases 10% bonds of Gibbons Co. having a par value of $300,000 at 100 plus accrued interest. Interest is payable April 1 and October 1.
2. On April 1, semi-annual interest is received.
3. On July 1. 9% bonds of Sampson Inc. are purchased. These bonds with a par value of $200,000 are purchased at 100 plus accrued interest. Interest dates are June 1 and December 1.
4. On October 1, semi-annual interest is received.
5. On December 1, semi-annual interest is received.
6. On December 31, the fair values of the bonds purchased on February 1 and July 1 are 95 and 93, respectively.
Required -
a. Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these are PV-OCI securities.
b. If Wild Company classified these as cost/amortized cost, explain how the journal entries would differ from those in part (a).
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