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Real-Time Corporation is a diversified company that uses an investment portfolio to manage its liquidity




Question;Real-Time Corporation is a diversified company that uses an investment portfolio to manage its liquidityand to enhance earnings. Their fiscal year ends on December 31. On October 1, 2010, its investmentportfolio consists of the following securities:DatePurchased07/01/10IssuerDescriptionCostMaslow Company1,000,000 shares of preferredstock, will be held indefinitely$20,000,000Market Value09/30/2010$19,400,00008/02/10CardinalPublishing250,000 shares of common stock,will be held unless needed forliquidity$ 3,750,000$ 4,500,00009/30/10Bardco Furniture$10,000,000 face value, 8 percentbonds, maturing April 15, 2019,interest paid semi-annually onOctober 15 and April 15, may besold if needed for liquidity purposes$10,000,000$10,000,000Real-Time Corporation made all of the appropriate adjusting entries on September 30, 2010. During thelast quarter of 2010 and the first few days of 2011, Real-Time Corporation had the following investmenttransactions:2010Oct 1Purchased U.S. Treasury Bonds for $2,300,000, the bonds mature in 2012 and bearinterest at 5 percent, paid semiannually on September 30 and March 30. Real-TimeCorporation anticipates that interest rate changes will force bond prices up in the nextmonth and will sell these bonds at that time.Oct 15Received semiannual interest on Bardco Bonds.Oct 31Sold the U.S. Treasury Bonds for $2,400,000 plus accrued interest.Nov 1Purchased $30,000,000 of Zardinia Corporation?s bonds to yield 9 percent and paid$31,951,190. The bonds pay interest semiannually on April 30 and October 31 at thestated rate of 10 percent. Real-Time Corporation plans to hold these bonds to theirmaturity date, which is October 31, 2020.Nov 30Sold the Bardco Bonds for $9,000,000 plus accrued interest because rising interest ratesare expected to cause the value of the bonds to continue to decline.Dec 1Purchased 500,000 Nazdak Corporation common stock, $1 par, for $18 per share. Thisinvestment was made in anticipation of an increase in the price of the company?s stock,at which point it will be sold.Dec 15Received $.50 per share in dividends on the Maslow Company stock.Page 1 of 2ACC5328 Financial Accounting III? 2011 South UniversityDec 312011Created any schedules needed to record adjusting entries for the investment portfolios,and prepared the adjusting entries. Market values for the investments on December 31,2010, were as follows:Maslow CompanyZardinia CorporationNazdak CorporationCardinal Publishing$20,700,000$29,700,000$8,500,000$4,100,000Jan 2Sold $10,000,000 of the Zardinia Corporation bonds for face value.Jan 5Sold all of the Nazdak shares at a price of $20 per share.Jan 10Sold all of the Cardinal Publishing shares for $17.50 per share.Page 2 of 2ACC5328 Financial Accounting III? 2011 South University


Paper#43269 | Written in 18-Jul-2015

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