Principles of Account

securities are debt investments not classified as trading or held-to-maturity securities.

Avaliable for sale

Phoenix Co. paid $25,000 to buy a 5%, 2-year bond payable with a $25,000 par value. The bonds pay interest semiannually. Phoenix intends to hold the bonds until they mature. The entry to reflect this purchase would include a debit to which of the following accounts in what amount?

Debt Investments for $25,000

securities are debt securities a company intends and is able to hold until maturity. They are reported in current assets or long-term assets, depending on their maturity date.

Held-to-maturity

Held-to-maturity securities are debt securities a company intends and is able to hold until ---------. They are reported in current assets or long-term assets, depending on their maturity date.

Maturity

Beau Co. had net sales last year of $30,000 and $40,000 in the current year. Last year its total assets were $75,000 and in the current year, total assets are $85,000. Total asset turnover for the current year is:

Reason: 40,000[net sales]/((75,000[2009 total assets] +85,000[2010 total assets])/2[average]) =.5

Johnson, Inc. holds equity securities in Flavor Co. with a significant influence. This means that Johnson, Inc. must hold _______% of Flavor Co. stock

Reason: Investor that owns 20% or more but not more than 50% of a company's voting stock is presumed to have significant influence.

Conway Co. purchases 1,000 shares of Ellis Co. common stock at par value for $35,000. Conway records the purchase of this equity investment with insignificant influence with a debit to _______ and a credit to Cash.

Stock investment

Identify the three factors that help determine how to account for investments in securities.

The percent ownership The security type (debt or equity) The intent to hold as either short-term or long-term

Grady Co. purchased debt securities that it plans to actively buy and sell for profit. Grady will record these securities as_______ security on its balance sheet.

Trading

securities are debt investments that the company intends to actively buy and sell for profit. They are always classified as current assets.

Trading

Debt investments not classified as trading or held-to-maturity securities are called

available for Sale

Total asset turnover is computed by taking net sales divided by:

average total assets