Below is information regarding the investment portfolio of Wilcox Corp. Use the straight-line method to amortize any bond discount or premium. Please show all your works
On January 1, 2012, Wilcox Company purchased the bonds of Quagmire Corp at 97. The 8% bonds had a face value of $800,000 and mature in five years. Wilcox had intended to hold them for five years, but may need to sell them sooner in order to free up cash for a construction project. The bonds had a fair value of $770,000 on December 31, 2012 and a fair value of $870,000 on December 31, 2013.
On February 1, 2012, Wilcox Company purchased 500 of the 10,000 outstanding shares of Lutrell Company common stock for $26.50 per share. On December 31, 2012, the stock had a fair value of $29.50 per share. On December 31,2013 the stock had a fair value of $33.20 per share. Wilcox plans to hold the stock for several years until they can acquire 20% of Lutrell Company's stock. Lutrell had net income of $350,000 and paid dividends of $20,000 in 2012 and had net income of $470,000 and paid $35,000 in dividends in 2013.
On February 9, 2012, Wilcox purchased 1,000 of the 10,000 shares of Temple Company common stock for $110 per share. Wilcox had intended to hold the stock for several years. On December 31, 2012, Temple Corp stock had a fair value of $75 per share. On September 15, 2013 Wilcox sold all of its 1,000 shares of Temple Corp stock for $85 per share to avoid any further losses from the decline in the stock price.
On October 1, 2013, Wilcox purchased bonds issued by Vesper Company for $95,000. The 8% bonds have a face value of $100,000 and pay interest semi-annually on April1 and October 1. The bonds mature on September 30, 2018. On December 31, 2013, the bonds had a fair value of $96,500. Wilcox feels that the bonds will continue to increase in value and plans to sell them in the first quarter of 2014.
On April 1, 2013, Wilcox purchased the bonds of Cornelius Corp for $96,000, including $3,100 of brokerage costs. The 10%, five-year bonds have a face value of $100,000 and pay interest semi-annually on April 1 and October 1. Wilcox purchased these bonds to fund an expansion project that they plan to start in the middle of 2018. The fair value of the bonds at December 31, 2013 is $97,300.
On November 1, 2013, Wilcox purchased 35,000 of the 100,000 outstanding shares of Rymer Corp stock for $32 per share. Wilcox had the ability and intent to hold the stock for a long time. On December 31, 2013, Rymer Corp's stock had a fair value of $34.50 per share. Rymer Corp reported $660,000 of net income for 2013 and declared $80,000 in dividends on December 31, 2013.
On May 1, 2012, Wilcox purchased 10,000 of the 50,000 outstanding shares of Newmar Company common stock for $54 per share. Wilcox was not able to exert significant control over Newmar Company. The fair value of Newmar Company's stock was $57.10 on December 31, 2012 and $58.20 on December 31, 2013. Newmar declared net income of $375,000 and dividends of $20,000 on December 31, 2012 and net income of $480,000 and dividends of $35,000 on December 31 2013.
On Jan 1, 2012, Wilcox purchased 1,000 of the 12,000 outstanding shares of Perez Company common stock for $36 per share plus $1,200 in brokerage fees. The fair value of the stock on December 31, 2012 was $39.50 per share. Wilcox did not know how long they expected to hold the Perez company stock, but assumed it would be for a few years. On July 1, 2013, Wilcox sold 25% of the Perez Company stock for $42.50 per share, plus $800 in brokerage (selling) fees. The fair value of Perez Company stock on December 31, 2013 was $44.80.