PROBLEM 1: RED Company had the following transactions in bond investment held as trading for the current year: April 1- Purchased 2,000, P1,000, 12% bonds of Orange Company at 92 excluding accrued...

1. At what amount should RED initially record its investment in Orange Company?

2. At what amount should RED initially record its investment in Yellow Corporation?

3. How much gain or (loss) should be recognized on the sale of Yellow bonds?

Extracted text: PROBLEM 1: RED Company had the following transactions in bond investment held as trading for the current year: April 1- Purchased 2,000, P1,000, 12% bonds of Orange Company at 92 excluding accrued interest. Interest is payable on February 1 and August 1 April 30 – Purchased 3,000, #1,000, 10% bonds of Yellow Corporation at 96 plus accrued interest. Interest is payable March 1 and September 1 October 1- Sold 1,200 of the Yellow bonds at 103 excluding interest November 30 - Sold 70% of the Orange bonds at 90 plus accrued interest December 31 - The market value of ORANGE bonds is 88; YELLOW Bonds is 105