Perry Company had no short-term investments prior to year 2011. It had the follo

Question

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 8,000 shares of Gem Co. stock at $24.25 per share plus a $360 brokerage fee.
May 1 Paid $200,000 to buy 90-day U.S. Treasury bills (debt securities): $200,000 principal amount, 6% interest, securities dated May 1.
July 7 Purchased 4,000 shares of PepsiCo stock at $49.25 per share plus a $350 brokerage fee.
20 Purchased 2,000 shares of Xerox stock at $16.75 per share plus a $410 brokerage fee.
Aug. 3 Received a check for principal and accrued interest on the U.S. Treasury bills that matured on July 29.
15 Received an $0.85 per share cash dividend on the Gem Co. stock.
28 Sold 4,000 shares of Gem Co. stock at $30 per share less a $450 brokerage fee.
Oct. 1 Received a $1.90 per share cash dividend on the PepsiCo shares.
Dec. 15 Received a $1.05 per share cash dividend on the remaining Gem Co. shares.
31 Received a $1.30 per share cash dividend on the PepsiCo shares.


Prepare journal entries to record the preceding transactions and events.

Explanation / Answer

Apr-16 Investment in Gem Co. Dr 194360, Bank Cr 194360 May-01 Investment in Treasury Bills Dr 200000, Bank Cr 200000 Jul-07 Investment in Pepsi Co. Dr 197350, Bank Cr 197350 Jul-20 Investment in Xerox. Dr 33910, Bank Cr 33910 Aug-03 Bank Dr 203000, Investment in Treasury Bills Cr 200000, int. Income Cr 3000 Aug-15 Bank Dr 6800, Dividend Income Cr 6800 Aug-28 Bank Dr 119550, Profit on sale Cr 22370, Investment in Gem Co. Cr 97180 Oct-01 Bank Dr 7600, Dividend Income 7600 Dec-15 Bank Dr 4200, Dividend Income 4200 Dec-31 Bank Dr 5200, Dividend Income 5200

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