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Stewart Enterprises has the following investments, all purchased prior to 2024: Stewart does not intend to sell any of these investments and does not believe it is more likely than not that it will have to sell any of the bond investments before fair value recovers. Required: Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025, 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. 2. Oliver Corporation 4 % bonds, purchased at face value, with an amortized cost of $3,010,000, classified as a trading security. Because of unrealized losses prior to 2024, the Oliver bonds have a fair value adjustment account with a credit balance of $370,000, such that the carrying value of the Oliver investment is $2,640,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Oliver investment had a fair value of $2,370,000, and Stewart calculated that $290,000 of the difference between amortized cost and fair value is a credit loss and $350,000 is a noncredit loss. At December 31, 2025, the Oliver investment had a fair value of $3,380,000. 3. Jones Incorporated 6% bonds, purchased at face value, with an amortized cost of $4,010,000, and classified as an available-for- sale investment. Because of unrealized losses prior to 2024, the Jones bonds have a fair value adjustment account with a credit balance of $570,000, such that the carrying value of the Jones investment is $3,440,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Jones investment had a fair value of $2,870,000, and Stewart calculated that $310,000 of the difference between amortized cost and fair value is a credit loss and $830,000 is a noncredit loss. At December 31, 2025, the Jones investment had a fair value of $3,215,000, and Stewart calculated that $210,000 of the difference between amortized cost and fair value is a credit loss and $585,000 is a noncredit loss. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Stewart Enterprises has the following investments, all purchased prior to 2024: Stewart does not intend to sell any of these investments and does not believe it is more likely than not that it will have to sell any of the bond investments before fair value recovers. Required: Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025, 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. 2. Oliver Corporation 4 % bonds, purchased at face value, with an amortized cost of $3,010,000, classified as a trading security. Because of unrealized losses prior to 2024, the Oliver bonds have a fair value adjustment account with a credit balance of $370,000, such that the carrying value of the Oliver investment is $2,640,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Oliver investment had a fair value of $2,370,000, and Stewart calculated that $290,000 of the difference between amortized cost and fair value is a credit loss and $350,000 is a noncredit loss. At December 31, 2025, the Oliver investment had a fair value of $3,380,000. 3. Jones Incorporated 6% bonds, purchased at face value, with an amortized cost of $4,010,000, and classified as an available-for- sale investment. Because of unrealized losses prior to 2024, the Jones bonds have a fair value adjustment account with a credit balance of $570,000, such that the carrying value of the Jones investment is $3,440,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Jones investment had a fair value of $2,870,000, and Stewart calculated that $310,000 of the difference between amortized cost and fair value is a credit loss and $830,000 is a noncredit loss. At December 31, 2025, the Jones investment had a fair value of $3,215,000, and Stewart calculated that $210,000 of the difference between amortized cost and fair value is a credit loss and $585,000 is a noncredit loss. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stewart Enterprises has the following investments, all purchased prior to 2024: Stewart does not intend to sell any of these investments and does not believe it is more likely than not that it will have to sell any of the bond investments before fair value recovers. Required: Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025, 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. 2. Oliver Corporation 4 % bonds, purchased at face value, with an amortized cost of $3,010,000, classified as a trading security. Because of unrealized losses prior to 2024, the Oliver bonds have a fair value adjustment account with a credit balance of $370,000, such that the carrying value of the Oliver investment is $2,640,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Oliver investment had a fair value of $2,370,000, and Stewart calculated that $290,000 of the difference between amortized cost and fair value is a credit loss and $350,000 is a noncredit loss. At December 31, 2025, the Oliver investment had a fair value of $3,380,000. 3. Jones Incorporated 6% bonds, purchased at face value, with an amortized cost of $4,010,000, and classified as an available-for- sale investment. Because of unrealized losses prior to 2024, the Jones bonds have a fair value adjustment account with a credit balance of $570,000, such that the carrying value of the Jones investment is $3,440,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Jones investment had a fair value of $2,870,000, and Stewart calculated that $310,000 of the difference between amortized cost and fair value is a credit loss and $830,000 is a noncredit loss. At December 31, 2025, the Jones investment had a fair value of $3,215,000, and Stewart calculated that $210,000 of the difference between amortized cost and fair value is a credit loss and $585,000 is a noncredit loss. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Transcribed Image Text:Stewart Enterprises has the following investments, all purchased prior to 2024: Stewart does not intend to sell any of these investments and does not believe it is more likely than not that it will have to sell any of the bond investments before fair value recovers. Required: Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025, 1. Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. 2. Oliver Corporation 4 % bonds, purchased at face value, with an amortized cost of $3,010,000, classified as a trading security. Because of unrealized losses prior to 2024, the Oliver bonds have a fair value adjustment account with a credit balance of $370,000, such that the carrying value of the Oliver investment is $2,640,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Oliver investment had a fair value of $2,370,000, and Stewart calculated that $290,000 of the difference between amortized cost and fair value is a credit loss and $350,000 is a noncredit loss. At December 31, 2025, the Oliver investment had a fair value of $3,380,000. 3. Jones Incorporated 6% bonds, purchased at face value, with an amortized cost of $4,010,000, and classified as an available-for- sale investment. Because of unrealized losses prior to 2024, the Jones bonds have a fair value adjustment account with a credit balance of $570,000, such that the carrying value of the Jones investment is $3,440,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Jones investment had a fair value of $2,870,000, and Stewart calculated that $310,000 of the difference between amortized cost and fair value is a credit loss and $830,000 is a noncredit loss. At December 31, 2025, the Jones investment had a fair value of $3,215,000, and Stewart calculated that $210,000 of the difference between amortized cost and fair value is a credit loss and $585,000 is a noncredit loss. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Bee Company 5% bonds, purchased at face value, with an amortized cost of $4,680,000, and classified as held-to-maturity. At December 31, 2024, the Bee investment had a fair value of $3,670,000, and Stewart calculated that $580,000 of the fair value decline is a credit loss and $430,000 is a noncredit loss. At December 31, 2025, the Bee investment had a fair value of $3,870,000, and Stewart calculated that $310,000 of the difference between fair value and amortized cost was a credit loss and $500,000 was a noncredit loss. Prepare the appropriate adjusting journal entries to account for each investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No Required 1 Required 2 Required 3 Oliver Corporation 4% bonds, purchased at face value, with an amortized cost of $3,010,000, classified as a trading security. Because of unrealized losses prior to 2024, the Oliver bonds have a fair value adjustment account with a credit balance of $370,000, such that the carrying value of the Oliver investment is $2,640,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Oliver investment had a fair value of $2,370,000, and Stewart calculated that $290,000 of the difference between amortized cost and fair value is a credit loss and $350,000 is a noncredit loss. At December 31, 2025, the Oliver investment had a fair value of $3,380,000. Prepare the appropriate adjusting journal entries to account for this investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. 1 No 2 1 2 Required 1 Required 2 Date December 31, 202 Fair value adjustment Date Loss on investments (unrealized, NI) December 31, 202 Loss on investments (unrealized, NI) Fair value adjustment Required 3 General Journal December 31, 202 Credit loss expense (NI) General Journal Allowance for credit losses December 31, 202 Fair value adjustment Jones Incorporated 6 % bonds, purchased at face value, with an amortized cost of $4,010,000, and classified as an available- for-sale investment. Because of unrealized losses prior to 2024, the Jones bonds have a fair value adjustment account with a credit balance of $570,000, such that the carrying value of the Jones investment is $3,440,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Jones investment had a fair value of $2,870,000, and Stewart calculated that $310,000 of the difference between amortized cost and fair value is a credit loss and $830,000 is a noncredit loss. At December 31, 2025, the Jones investment had a fair value of $3,215,000, and Stewart calculated that $210,000 of the difference between amortized cost and fair value is a credit loss and $585,000 is a noncredit loss. Prepare the appropriate adjusting journal entries to account for this investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. < Required 1 December 31, 202 Allowance for credit losses Credit loss expense (NI) Loss on investments (unrealized, NI) December 31, 202 Credit loss expense (NI) Fair value adjustment < Required 2 X Required 3 > Debit 830,000 Debit 290,000 310,000 290,000 Required 3 > Credit 830,000 Credit 310,000 290,000 290,000 Show less A Show less A
Transcribed Image Text:No Required 1 Required 2 Required 3 Oliver Corporation 4% bonds, purchased at face value, with an amortized cost of $3,010,000, classified as a trading security. Because of unrealized losses prior to 2024, the Oliver bonds have a fair value adjustment account with a credit balance of $370,000, such that the carrying value of the Oliver investment is $2,640,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Oliver investment had a fair value of $2,370,000, and Stewart calculated that $290,000 of the difference between amortized cost and fair value is a credit loss and $350,000 is a noncredit loss. At December 31, 2025, the Oliver investment had a fair value of $3,380,000. Prepare the appropriate adjusting journal entries to account for this investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. 1 No 2 1 2 Required 1 Required 2 Date December 31, 202 Fair value adjustment Date Loss on investments (unrealized, NI) December 31, 202 Loss on investments (unrealized, NI) Fair value adjustment Required 3 General Journal December 31, 202 Credit loss expense (NI) General Journal Allowance for credit losses December 31, 202 Fair value adjustment Jones Incorporated 6 % bonds, purchased at face value, with an amortized cost of $4,010,000, and classified as an available- for-sale investment. Because of unrealized losses prior to 2024, the Jones bonds have a fair value adjustment account with a credit balance of $570,000, such that the carrying value of the Jones investment is $3,440,000 prior to making any adjusting entries in 2024. At December 31, 2024, the Jones investment had a fair value of $2,870,000, and Stewart calculated that $310,000 of the difference between amortized cost and fair value is a credit loss and $830,000 is a noncredit loss. At December 31, 2025, the Jones investment had a fair value of $3,215,000, and Stewart calculated that $210,000 of the difference between amortized cost and fair value is a credit loss and $585,000 is a noncredit loss. Prepare the appropriate adjusting journal entries to account for this investment for 2024 and 2025. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. < Required 1 December 31, 202 Allowance for credit losses Credit loss expense (NI) Loss on investments (unrealized, NI) December 31, 202 Credit loss expense (NI) Fair value adjustment < Required 2 X Required 3 > Debit 830,000 Debit 290,000 310,000 290,000 Required 3 > Credit 830,000 Credit 310,000 290,000 290,000 Show less A Show less A
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