Exercise 17 21 Presented Selected Information Related Financial Instruments Dawson Company Q17784264

Exercise 17-21
Presented below is selected information related to the financialinstruments of Dawson Company at December 31, 2014. This is DawsonCompany’s first year of operations.

CarryingAmount

Fair Value(at December 31)

Investment in debt securities (intent is to hold tomaturity)

$46,010

$47,810

Investment in Chen Company stock

816,500

917,200

Bonds payable

225,200

202,300

(a) Dawson elects to use the fair value optionwhenever possible. Assuming that Dawson’s net income is $136,200 in2014 before reporting any securities gains or losses, determineDawson’s net income for 2014.

Dawson’s net income for 2014

$

(b) Record the journal entry, if any, necessary atDecember 31, 2014, to record the fair value option for the bondspayable. (Credit account titles are automaticallyindented when amount is entered. Do not indent manually. If noentry is required, select “No Entry” for the account titles andenter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Dec. 31, 2014

 
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