UNIVERSITAS INDONESIA

FAKULTAS EKONOMI DAN BISNIS

PROBLEM OF COLLABORATIVE LEARNING: INVESTMENT

PROBLEM 1
The following information relates to the debt investments to Mayor Company on 2020.
1. On January 1, Purchased 100, $1,000 Mirror Corp. 10% bonds for $100,000 (at 100).
Interest is payable on July 1 and January 1.
2. On April 1, Purchased 80, $1,000 Bondi Inc 9% bonds for $80,000 (at 100). Interest is
payable on April 1 and October 1.
3. On July 1, semiannual interest is received.
4. On October 1, semiannual interest is received.
5. On October 1, Sold 30 Bondi Inc. bonds for $34,000 after receiving the interest due.
6. On December 31, accrued semiannual interest on Mirror Corp. and Bondi Inc bonds.
7. On December 31, the fair value of Mirror Corp. and Bondi Inc bonds are 102 and 101,
respectively (102 means fair value=102% of par value). Mayor Company doesn’t have
debt investment before 2020.
Instructions
(a) Prepare any journal entries you consider necessary, including year end entries
(December 31), assuming these investments are managed to profit from changes in
market interest rates (held for trading). Mayor Company doesn’t have debt investment
before 2020.
(b) Prepare a partial statement of financial position showing the Investment account at
December 31, 2020.
(c) If Mayor Company purchase the debt investment to collect the contractual cash flow
(held the debt investment to maturity), explain how the journal entries would differ
from those in part (a).
PROBLEM 2
The following information relates to the equity investments to Benji Company on 2020.
1. On January 1, Benji acquires 50,000 ordinary shares (represent 30% ownership) of
Coconut Plc for $130,000.
2. On May 1, Benji purchased 2,000 shares (less than 10% ownership) of Dodo Co. at $18
per share.
3. On June 1, Benji purchased 3,000 shares (less than 10% ownership) of Denver Co. at
$15 per share
4. On July 1, Benji sold 500 shares of Dodo for $19 per share.
5. On September 30, Coconut declared and paid cash dividend totaling to $ 100,000
 6. On December 1, Dodo declared and paid a $1 per share cash dividend.
7. On December 10, Denver declared a cash dividend of $2 per share to be paid in the next
month.
8. On December 31, Coconut, Denver, and Dodo reported net income $230,000;
$400,000; and 325,000 respectively.
9. At December 31, 2020, the shares had the following price per share value: Coconut
$25, Dodo $17 and Denver $17
Instructions
(a) Prepare any journal entries you consider necessary, including year-end entries
(December 31), assuming these investments (except investment in Coconut Plc. share)
are managed to profit from changes in market price (held for trading). Benji Company
doesn’t have equity investment before 2020.
(b) Prepare a partial statement of financial position showing the Investment account at
December 31, 2020