Cheat Sheet December Exam (Part 2)

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Business Administration
Business Administration 2257
Chris Sweeney

Bonds ContinuedCalculate and Record Interest from Last PayABOVEStep 2 Amortize Disc or PremiumABOVE Conversion of Bonds to CS Step 1 Step 3 Record The ConversionNote The carrying value of the bonds FVpremiumsdiscounts is used as the value for Common StockDr Bonds PayFace Value Dr Premium on Bonds PayUnamortized Portion Cr Common Stock ORDr Bonds Pay Cr Discount on Bonds Pay Cr Common StockIf PremiumEffective Rate will be lower than Contract Rate opp for Discount Effective Rate of Interest Marketable Securities Asset Account PurchaseDr MSStocksCr CashNote Include fees to add to value of MSDividend RevenueOnly when received Dr Cash Cr Dividend Revenue Stocks FYE Compare to Market ValueIf MV is less than BVDr Unrealized Gains and losses Cr Stock Valuation AllowanceIf MV is greater than BVCr Unrealized Gains and Losses Dr Stock Valuation Allow Bonds Purchase Dr MSBonds Cr Cash Note Add fees You also buy the accrued Interest Dr Interest Rec Cr Cash Interest First Time you must recognize amount in Interest RecDr Cash Cr Interest RevWRONG if Int Rec 0 Adjusting Entry Dr Int Revenue Cr Int Rec After first Interest Payment the transaction is Dr Cash Cr Interest RevThe exception is if you buy MS on Interest Payment Date FYE Compare to Market Value Same Transactions as ABOVE except the other account is Valuation AllowanceMay have to compare MV by using Present Value Tables Sales of MSBonds or Stocks Step 1 Calculate any accrued Int for BondsDr Cash Cr Bond Interest RevStep 2 C
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