Response to the following questions:
1. How are short-term held-to-maturity securities reported (valued) on the balance sheet?
2. Under what two conditions should investments be classified as current assets?
3. On a balance sheet, what valuation must be reported for short-term investments in trading securities?
4. A U.S. company sells a product to a British company with the transaction listed in British pounds. On the date of the sale, the transaction total of $16,000 is billed as £10,000, reflecting an exchange rate of 1.60 (that is, $1.60 per pound).
Prepare the entry to record (1) the sale and (2) the receipt of payment in pounds when the exchange rate is 1.50.