QS 15-9 Debt securities transactions L.O. P2

On February 1, 2011, Charo Mendez purchased 6% bonds issued by CR Utilities at a cost of $30,000, which is their par value. The bonds pay interest semiannually on July 31 and January 31. For 2011, prepare entries to record Mendez’s July 31 receipt of interest and its December 31 year-end interest accrual. (Do not round your intermediate calculations. Omit the “$” sign in your response.)

DateGeneral JournalDebitCrediJuly 31  (Click to select)Interest revenueInterest receivableBond interest expenseBonds payableAccounts receivableAccounts payableCashInterest payable            (Click to select)Interest revenueAccounts receivableInterest receivableAccounts payableInterest payableBond interest expenseBonds payableCash        Dec. 31  (Click to select)Bond interest expenseAccounts payableInterest revenueBonds payableInterest payableCashAccounts receivableInterest receivable            (Click to select)Accounts payableInterest payableBonds payableInterest receivableCashInterest revenueAccounts receivableBond interest expense    

Exercise 15-2 Accounting for short-term trading securities L.O. P1

Prepare journal entries to record the following transactions involving the short-term securities investments of Smart Co., all of which occurred during year 2011.

  a.

On March 22, purchased 770 shares of FIX Company stock at $11 per share plus a $340 brokerage fee. These shares are categorized as trading securities. (Omit the “$” sign in your response.)

     DateGeneral JournalDebitCredit  Mar. 22  (Click to select)Dividend revenueInterest expenseAccounts receivableInterest revenueAccounts payableGain on sale of short-term investentsShort-term investments-trading (FIX)Cash            (Click to select)Interest revenueInterest expenseShort-term investments-trading (FIX)CashAccounts receivableAccounts payableDividend revenueGain on sale of short-term investments      b.

On September 1, received a $2 per share cash dividend on the FIX Company stock purchased in transaction a. (Omit the “$” sign in your response.)

  DateGeneral JournalDebitCredit  Sept. 1  (Click to select)Interest revenueAccounts receivableGain on sale of short-term investmentsDividend revenueAccounts payableInterest expenseCashShort-term investments-trading (FIX)            (Click to select)Accounts payableAccounts receivableGain on sale of short-term investmentsInterest revenueCashDividend revenueShort-term investments-trading (FIX)Interest expense      c.

On October 8, sold 385 shares of FIX Co. stock for $21 per share, less a $330 brokerage fee. (Do not round your intermediate calculations. Omit the “$” sign in your response.)

  DateGeneral JournalDebitCredit  Oct. 8  (Click to select)Interest revenueAccounts payableCashAccounts receivableDividend revenueGain on sale of short-term investmentsShort-term investments-trading (FIX)Interest expense            (Click to select)Accounts receivableInterest revenueShort-term investments-trading (FIX) Gain on sale of short-term investmentsInterest expenseAccounts payableDividend revenueCash            (Click to select)Dividend revenueAccounts payableInterest revenueAccounts receivableInterest expense Gain on sale of short-term investmentsShort-term investments-trading (FIX)Cash    

Serial Problem Business Solutions L.O. P1

While reviewing the March 31, 2012, balance sheet of Business Solutions, Santana Rey notes that the business has built a large cash balance of $68,070. Its most recent bank money market statement shows that the funds are earning an annualized return of 0.50%. S. Rey decides to make several investments with the desire to earn a higher return on the idle cash balance. Accordingly, in April 2012, Business Solutions makes the following investments in trading securities:

April 16Purchases 460 shares of Johnson & Johnson stock at $45 per share plus $400 commission.April 30Purchases 330 shares of Starbucks Corporation at $26 per share plus $170 commission.

On June 30, 2012, the per share market price (fair value) of the Johnson & Johnson shares is $50 and the Starbucks shares is $23.

Required:1.

Prepare journal entries to record the April purchases of trading securities by Business Solutions. (Omit the “$” sign in your response.)

DateGeneral JournalDebitCreditApril 16, 2012  (Click to select)Accounts receivableCashFair value adjustment-tradingUnrealized gain-incomeShort-term investments-trading (J&J)Accounts payableSalesShort-term investments-trading (Starbucks)            (Click to select)Short-term investments-trading (Starbucks)SalesCashFair value adjustment-tradingUnrealized gain-incomeShort-term investments-trading (J&J)Accounts payableAccounts receivable        April 30, 2012  (Click to select)Accounts payableSalesAccounts receivableCashShort-term investments-trading (Starbucks)Long-term investments-trading (Starbucks)Short-term investments-trading (J&J)Long-term investments-trading (J&J)            (Click to select)Accounts receivableCashAccounts payableShort-term investments-trading (J&J)Long-term investments-trading (Starbucks)Short-term investments-trading (Starbucks)Long-term investments-trading (J&J)Sales    2.

On June 30, 2012, prepare the adjusting entry to record any necessary fair value adjustment to its portfolio of trading securities. (Omit the “$” sign in your response.)

DateGeneral JournalDebitCreditJune 30, 2012  (Click to select)Short-term investments-trading (Starbucks)Accounts payableLong-term investments-trading (Starbucks)Accounts receivableShort-term investments-trading (J&J)Unrealized Loss-EquityUnrealized gain-incomeFair value adjustment-trading            (Click to select)Unrealized Loss-EquityFair value adjustment-tradingAccounts receivableShort-term investments-trading (Starbucks)Short-term investments-trading (J&J)Unrealized gain-incomeAccounts payableLong-term investments-trading (Starbucks)    

Problem 15-5A Accounting for long-term investments in securities; with and without significant influence L.O. P3, P4

[The following information applies to the questions displayed below.]

Pillar Steel Co., which began operations on January 4, 2011, had the following subsequent transactions and events in its long-term investments.

2011Jan.5 Pillar purchased 60,000 shares (25% of total) of Kildaire’s common stock for $1,847,200.Oct.23 Kildaire declared and paid a cash dividend of $3.40 per share.Dec.31

 Kildaire’s net income for 2011 is $1,166,000, and the fair value of its stock at December 31 is $35.00 per share.

2012Oct.15 Kildaire declared and paid a cash dividend of $2.90 per share.Dec.31

 Kildaire’s net income for 2012 is $1,477,200, and the fair value of its stock at December 31 is $38.00 per share.

2013Jan.2 Pillar sold all of its investment in Kildaire for $2,045,100 cash.rev: 03_05_2014_QC_46153references 6.value:

2.00 points

   

Problem 15-5A Part 2

Part 2

Assume that although Pillar owns 25% of Kildaire’s outstanding stock, circumstances indicate that it does not have a significant influence over the investee and that it is classified as an available-for-sale security investment.

Required: 

Prepare journal entries to record the preceding transactions and events for Pillar. Also prepare an entry dated January 2, 2013, to remove any balance related to the fair value adjustment. (Omit the “$” sign in your response.)

DateGeneral JournalDebitCreditJan. 5, 2011    (Click to select)Unrealized loss-equityEarnings from long-term investmentFair value adjustment-AFSCashDividend revenueUnrealized gain-equityLong-term investments-AFSGain on sale of investments            (Click to select)CashEarnings from long-term investmentGain on sale of investmentsFair value adjustment-AFSUnrealized gain-equityUnrealized loss-equityLong-term investments-AFSDividend revenue        Oct. 23, 2011    (Click to select)CashGain on sale of investmentsFair value adjustment-AFSLoss on sale of investmentsDividend revenueUnrealized gain-equityLong-term investments-AFSUnrealized loss-equity            (Click to select)Unrealized gain-equityUnrealized loss-equityCashLoss on sale of investmentsGain on sale of investmentsFair value adjustment-AFSLong-term investments-AFSDividend revenue        Dec. 31, 2011    (Click to select)Unrealized loss-equityDividend revenueLoss on sale of investmentsLong-term investments-AFSEarnings from long-term investmentFair value adjustment-AFSGain on sale of investmentsUnrealized gain-equity      &nbs;     (Click to select)Loss on sale of investmentsGain on sale of investmentsFair value adjustment-AFSEarnings from long-term investmentUnrealized gain-equityDividend revenueUnrealized loss-equityLong-term investments-AFS        Oct. 15, 2012    (Click to select)Gain on sale of investmentsLoss on sale of investmentsLong-term investments-AFSCashUnrealized loss-equityFair value adjustment-AFSDividend revenueUnrealized gain-equity            (Click to select)Unrealized gain-equityLong-term investments-AFSGain on sale of investmentsLoss on sale of investmentsCashFair value adjustment-AFSDividend revenueUnrealized loss-equity        Dec. 31, 2012    (Click to select)CashLong-term investments-AFSEarnings from long-term investmentUnrealized gain-equityGain on sale of investmentsFair value adjustment-AFSLoss on sale of investmentsDividend revenue            (Click to select)Dividend revenueGain on sale of investmentsLoss on sale of investmentsEarnings from long-term investmentLong-term investments-AFSFair value adjustment-AFSCashUnrealized gain-equity        Jan. 2, 2013    (Click to select)Dividend revenueEarnings from long-term investmentUnrealized gain-equityLong-term investments-AFSUnrealized loss-equityCashLoss on sale of investmentsGain on sale of investments            (Click to select)Unrealized loss-equityFair value adjustment-AFSUnrealized gain-equityCashGain on sale of investmentsDividend revenueLoss on sale of investmentsLong-term investments-AFS            (Click to select)Long-term investments-AFSDividend revenueGain on sale of investmentsCashUnrealized loss-equityFair value adjustment-AFSUnrealized gain-equityLoss on sale of investments        Jan. 2, 2013    (Click to select)Unrealized gain-equityLoss on sale of investmentsCashFair value adjustment-AFSEarnings from long-term investmentDividend revenueGain on sale of investmentsUnrealized loss-equity            (Click to select)Gain on sale of investmentsFair value adjustment-AFSLoss on sale of investmentsCashEarnings from long-term investmentUnrealized loss-equityUnrealized gain-equityDividend revenue     

Problem 15-2A Recording, adjusting, and reporting short-term available for-sale securities L.O. P3

[The following information applies to the questions displayed below.]

Perry Company had no short-term investments prior to year 2011. It had the following transactions involving short-term investments in available-for-sale securities during 2011.

Apr.16 Purchased 6,000 shares of Gem Co. stock at $27.00 per share plus a $420 brokerage fee.July7 Purchased 3,000 shares of PepsiCo stock at $47.00 per share plus a $390 brokerage fee. 20 Purchased 1,500 shares of Xerox stock at $17.00 per share plus a $470 brokerage fee. 15 Received an $1.00 per share cash dividend on the Gem Co. stock. 28 Sold 3,000 shares of Gem Co. stock at $33.75 per share less a $510 brokerage fee.Oct.1 Received a $1.90 per share cash dividend on the PepsiCo shares.Dec.15 Received a $1.15 per share cash dividend on the remaining Gem Co. shares. 31 Received a $1.05 per share cash dividend on the PepsiCo shares.references 7.value:

3.00 points

   

Problem 15-2A Part 1

Required:1.Prepare journal entries to record the preceding transactions and events. (Do not round your intermediate calculations. Use a 360-day year for interest calculation. Omit the “$” sign in your response.)DateGeneral JournalDebitCreditApr. 16, 2011    (Click to select)CashShort-term investments-AFS (T-bills)Short-term investments-AFS (Gem)Unearned incomeDividend revenueBrokerage feeSecuritiesAccounts payable            (Click to select)Brokerage feeShort-term investments-AFS (Gem)Accounts payableCashShort-term investments-AFS (T-bills)SecuritiesDividend revenueUnearned income        July 7, 2011    (Click to select)Accounts payableCashDividend revenueShort-term investments-AFS (Pepsi)SecuritiesAccounts receivableUnearned incomeShort-term investments-AFS (Gem)            (Click to select)Accounts payableSecuritiesUnearned incomeShort-term investments-AFS (Pepsi)Short-term investments-AFS (Gem)Accounts receivableCashDividend revenue        July 20, 2011    (Click to select)CashAccounts payableBrokerage feeSecuritiesShort-term investments-AFS (Xerox)Accounts receivableDividend revenueUnearned income            (Click to select)Brokerage feeShort-term investments-AFS (Xerox)Dividend revenueSecuritiesAccounts payableCashAccounts receivableUnearned income            Aug. 15, 2011    (Click to select)Brokerage feeAccounts receivableCashShort-term investments-AFS (Gem)Accounts payableDividend revenueUnearned incomeShort-term investments-AFS (T-bills)            (Click to select)Unearned revenueDividend revenueSecuritiesShort-term investments-AFS (Gem)Accounts payableAccounts receivableCashShort-term investments-AFS (T-bills)        Aug. 28, 2011    (Click to select)Unearned incomeAccounts receivableShort-term investments-AFS (Gem)Brokerage feeDividend revenueShort-term investments-AFS (Xerox)CashGain on sale of short-term investments            (Click to select)Dividend revenueUnearned incomeShort-term investments-AFS (Gem)Accounts receivableShort-term investments-AFS (Xerox)Gain on sale of short-term investmentsCashBrokerage fee            (Click to select)Brokerage feeGain on sale of short-term investmentsDividend revenueAccounts receivableShort-term investments-AFS (Xerox)Short-term investments-AFS (Gem)Unearned incomeCash        Oct. 1, 2011    (Click to select)Accounts receivableShort-term investments-AFS (Pepsi)SecuritiesCashBrokerage feeDividend revenueUnearned incomeAccounts payable            (Click to select)Accounts receivableCashSecuritiesUnearned revenueShort-term investments-AFS (Pepsi)Accounts payableDividend revenueBrokerage fee        Dec. 15, 2011    (Click to select)Short-term investments-AFS (Gem)Brokerage feeCashSecuritiesDividend revenueAccounts payableShort-term investments-AFS (Xerox)Unearned income            (Click to select)Accounts payableDividend revenueShort-term investments-AFS (Gem)Unearned incomeBrokerage feeShort-term investments-AFS (Xerox)SecuritiesCash        Dec. 31, 2011    (Click to select)Brokerage feeAccounts payableCashShort-term investments-AFS (Pepsi)Accounts receivableDividend revenueUnearned incomeSecurities            (Click to select)Brokerage feeAccounts payableUnearned revenueDividend revenueAccounts receivableSecuritiesShort-term investments-AFS (Pepsi)Cash    value:

2.00 points

   

Problem 15-2A Part 2

2.

Prepare a table to compare the year-end cost and fair values of Perry’s short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $29.25; PepsiCo, $44.25; and Xerox, $14.00. (Do not round your intermediate calculations. Negative amount should be indicated by a minus sign. Omit the “$” sign in your response.)

 9.value:

1.00 points

   

Problem 15-2A Part 3

3.

Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in available-for-sale securities. (Do not round your intermediate calculations. Omit the “$” sign in your response.)

DateGeneral JournalDebitCreditDec. 31, 2011  (Click to select)Accounts payableCashInterest revenueUnearned incomeAccounts receivableFair value adjustment-AFS (ST)Dividend revenueUnrealized loss-equity            (Click to select)Interest revenueDividend revenueFair value adjustment-AFS (ST)Accounts payableAccounts receivableUnearned incomeCashUnrealized loss-equity     CostFair ValueUnrealized

Gain (Loss)

  Gem Co.$   $      Pepsi Co.       Xerox        Total$   $   $    

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