Student Name:
Class:
Problem 12-05
AMALGAMATED GENERAL CORPORATION
General Journal
($ in millions)
Account Debit Credit
October 18
Investment in Millwork Ventures preferred shares
Cash
October 31
Cash
Investment revenue
November 1
Investment in Holistic Entertainment bonds
Cash
November 1
Cash
Loss on sale of investments
Investment in Kansas Abstractors bonds
December 1
Investment in Household Plastics bonds
Cash
December 20
Investment in U.S. Treasury bonds
Cash
December 21
Investment in NXS common shares
Cash
December 23
Cash
Investment in U.S. Treasury bonds
Gain on sale of investments
December 29
Cash
Investment revenue
Student Name:
Class:
Problem 12-05
AMALGAMATED GENERAL CORPORATION
General Journal
($ in millions)
Account Debit Credit
December 31
Accrued interest:
Investment revenue receivable - Holistic Entertainment
Investment revenue receivable - Household Plastics
Investment revenue
Revaluations:
Unrealized holding loss on investments
Investment in Millwork Ventures preferred shares
Investment in NXS common shares
Unrealized holding gain on investments
Closing entry:
Unrealized holding gain on investments (NXS)
Investment revenue
Gain on sale of investments (U.S. Treasury bonds)
Loss on sale of investments (Kansas Abstractors)
Income summary (to balance)
2007
January 7
Cash
Loss on sale of investments (to balance)
Investment in NXS common shares (after adjusting entry)
Given Data P12-05:
AMALGAMATED GENERAL CORPORATION
Securities (bonds) held 10/1 (Kansas Abstractors, Inc.) $30,000,000
Interest rate on bonds (Kansas Abstractors, Inc.) 10%
Additional information:
Number of preferred shares purchased (Millwork Ventures Company), 10/18/2006 2,000,000
Cost of preferred shares purchased (Millwork Ventures Company), 10/18/2006 $58,000,000
Semi-annual interest received (Kansas Abstractors, Inc.), 10/31/2006 $1,500,000
Bonds purchased (Holistic Entertainment Enterprises), 11/1/2006 $18,000,000
Interest rate of bonds purchased (Holistic Entertainment Enterprises), 11/1/2006 10%
Sold bonds (Kansas Abstractors, Inc.), 11/1/2006 $28,000,000
Bonds purchased (Household Plastics Corporation), 12/1/2006 $60,000,000
Interest rate of bonds purchased (Household Plastics Corporation), 12/1/2006 12%
U.S. Treasury bonds purchased, 12/20/2006 $5,600,000
Number of common shares purchased (NXS Corporation), 12/21/2006 4,000,000
Cost of common shares purchased (NXS Corporation), 12/21/2006 $44,000,000
U. S. Treasury bonds sold, 12/23/2006 $5,700,000
Dividend received from preferred shares (Millwork Ventures Company), 12/29/2006 $3,000,000
Market price per share for preferred stock (Millwork Ventures Company), 12/31/2006 $27.50
Market price per share (NXS Corporation), 12/31/2006 $11.50
Fair value of bonds (Household Plastics Corporation), 12/31/2006 $58,700,000
Fair value of bonds (Holistic Entertainment Enterprises), 12/31/2006 $16,700,000
Sold common shares (NXS Corporation), 1/7/2007 $43,000,000
Student Name:
Class:
Problem 12-07
RUNYAN BAKERY
General Journal
($ in millions)
Requirement 1:
Account Debit Credit
Purchase
Investment in Lavery Labeling shares
Cash
Net income
Investment in Lavery Labeling shares
Investment revenue
Dividends
Cash
Investment in Lavery Labeling shares
Depreciation adjustment
Investment revenue
Investment in Labery Labeling shares
Requirement 2:
Account Debit Credit
Purchase
Investment in Lavery Labeling shares
Cash
Dividends
Cash
Investment in Lavery Labeling shares
Adjusting entry
Net unrealized holding loss on investments
Fair value adjustment
Given Data P12-07:
RUNYAN BAKERY
Percentage of outstanding common shares bought 30%
Purchase amount $324,000,000
Number of shares purchased 10,000,000
Dividend paid on 12/15/2006 $2 per share
Market value of common stock at 12/31/2006 $31 per share
Fair market book value of assets $800,000,000
Assets - fair value over book value $80,000,000
Useful life of plant facilities 6 years
Net income, 2006 $160,000,000
Student Name:
Class:
Problem 12-08
NORTHWEST PAPERBOARD COMPANY
General Journal
($ in millions)
Requirement 1:
Account Debit Credit
Purchase
Investment in Vancouver T&M shares
Cash
Net income
Investment in Vancouver T&M shares
Investment revenue
Dividends
Cash
Investment in Vancouver T&M shares
Inventory
Investment revenue
Investment in Vancouver T&M shares
Depreciation
Investment revenue
Investment in Vancouver T&M shares
Requirement 2:
Investment Revenue ($ in millions)
Explanation Debit Credit Balance
Share of income
Inventory
Depreciation
Requirement 3:
Investment in Vancouver T&M shares ($ in millions)
Explanation Debit Credit Balance
Cost
Share of income
Dividends
Inventory
Depreciation
Requirement 4:
Given Data P12-08:
NORTHWEST PAPERBOARD COMPANY
Percentage of outstanding common shares bought 40%
Purchase amount $400,000,000
Book value of net assets $775,000,000
Inventory - fair value over book value $5,000,000
Plant - fair value over book value $20,000,000
Useful life of plant facilities 16 years
Net income, 2006 $140,000,000
Cash dividend paid $30,000,000
Student Name:
Class:
Problem 12-11
ROTHSCHILD CHAIR COMPANY, INC.
General Journal
Account Debit Credit
Requirement 1:
Land
Loss on debt restructuring
Note receivable
Accrued interest receivable
Requirement 2:
ROTHSCHILD CHAIR COMPANY, INC.
Student Name:
Class:
Problem 12-11
Analysis
Previous Value:
Accrued interest
Principal
Carrying amount of the receivable
New Value:
Interest
Principal
Present value of the receivable
Loss:
Amoritization Schedule
Cash Effective Increase in
Interest Interest Balance Outstanding
(by agreement) 10% (Discount Reduction) Balance
ROTHSCHILD CHAIR COMPANY, INC.
General Journal
Account Debit Credit
January 1, 2006
Loss on troubled debt restructuring
Accrued interest receivable
Note receivable
December 31, 2006
Cash
Note receivable
Interest revenue
December 31, 2007
Cash
Note receivable
Interest revenue
December 31, 2008
Cash
Note receivable
Interest revenue
December 31, 2009
Cash
Note receivable
Interest revenue
Cash
Note receivable
Requirement 3:
ROTHSCHILD CHAIR COMPANY, INC.
Student Name:
Class:
Problem 12-11
Analysis
Previous Value:
Accrued interest
Principal
Carrying amount of the receivable
New Value:
Interest
Loss:
Amoritization Schedule
Cash Effective Increase in
Interest Interest Balance Outstanding
(by agreement) 10% (Discount Reduction) Balance
ROTHSCHILD CHAIR COMPANY, INC.
General Journal
Account Debit Credit
January 1, 2006
Loss on troubled debt restructuring
Accrued interest receivable
Note receivable
December 31, 2006
Note receivable
Interest revenue
December 31, 2007
Note receivable
Interest revenue
December 31, 2008
Note receivable
Interest revenue
December 31, 2009
Note receivable
Interest revenue
Cash
Note receivable
Given Data P12-11:
ROTHSCHILD CHAIR COMPANY, INC.
Bank note $20,000,000
Bank note interest 10%
Fair market value of land $16,000,000
Book value of land 13,000,000
Remaining 4 interest payments 1,000,000
Principal reduced to 15,000,000
Settlement of debt at maturity date 27,775,000