Vilander Carecenters Inc. provides financing and capital to the healthcare industry, with a particular focus on nursing homes for the elderly. the following selected transactions relate to bonds acquired as an invenstment by Vilander, whose fiscal year ends on December 31.
2018
| Jan. 1 | Purchased at face value $2,000,000 of Javier Nursing Centers, Inc., 10-year, 8% bonds dated January 1, 2018, directly from Javier. |
| Dec. 31 | Accrual of interest at year-end on the Javier bonds |
(Assume that all intervening transactions and adjustments have been properly recorded and hat the number of bonds owned has not charged from December 31, 2018, to December 31, 2020.)
2021
| Jan. 1 | Received the annual interest on the Javier bonds |
| Jan. 1 | Sold $1,000,000 Javier bonds at 106. |
| Dec. 31 | Accrual of interest at year-end on the Javier bonds |
Instructions
- Journalize the listed transactions for the years 2018 and 2021
- Assume that the fair value of the bonds at December 31, 2018, was $2,200,000. These bonds are classified as available for sale securities. Prepare the adjusting entry to record these bonds at fair value.
- Based on your analysis in part(b), show the balance sheet presentation of the bonds and interest receivable at December 31, 2018. Assume the investments are considered long-term. Indicate where any unrealized gain or loss is reported in the financial statements
Solution
a.
Vilander Carecenters Inc.
Journal Entries
Journal Entries
b.
Vilander Carecenters Inc.
Adjusting Entry
Adjusting Entry
c.
Vilander Carecenters Inc.
Balance Sheet(Partial)
December 31, 2018.
Balance Sheet(Partial)
December 31, 2018.
