Brief Exercise 17-4 Sandhill Corporation purchased trading investment bonds for

Question

Brief Exercise 17-4 Sandhill Corporation purchased trading investment bonds for $58,000 at par. At December 31, Sandhill received annual interest of $2,320, and the fair value of the bonds was $55,600. Prepare Sandhill's journal entries for (a) the purchase of the investment, (b) the interest received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.) (Credit account tities are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

No. Account titles and explanation Debit Credit (a) Debt Investments $58,000 Cash $58,000 (b) Cash $2,320 Interest Revenue $2,320 (c) Unrealized Holding Loss – Income($58,000 - $55,600) $2,400 Fair Value Adjustment (Trading) $2,400

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