APPENDIX B SELECTED TOPICS TOPIC 1: INVESTMENTS ASSIGNMENTS B1–1 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.
B1–3 Cost method
B1–4 Held-to-maturity securities that will mature within one year are reported as current assets. Securities maturing beyond one year are reported as long-term assets.
B1–5 a.
b.
c.
Investments—Vasquez City Bonds Interest Receivable Cash
420,000 6,300
Cash ($420,000 × 6% × 1/2) Interest Receivable Interest Revenue
12,600
Cash Loss on Sale of Investments Interest Revenue Investments—Vasquez City Bonds
208,950* 2,100
426,300
6,300 6,300
1,050 210,000
* Sales proceeds ($210,000 × 99%)……………………………………
$207,900 1,050 Accrued interest………………………………………………………… $208,950 Total proceeds from sale………………………………………………
d.
Cash Investments—Vasquez City Bonds
210,000 210,000
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