Perry Company had no short-term investments prior to year 2011. It had the follo
ID: 2350580 • Letter: P
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 10,000 shares of Gem Co. stock at $26.25 per share plus a $500 brokerage fee.
May 1
Paid 290,000 to buy 90-day U.S. Treasury bills (debt securities): $290,000 principal amount, 5% interest, securities dated May 1.
July 7 Purchased 5,000 shares of PepsiCo stock at $50.00 per share plus a $470 brokerage fee.
20 Purchased 2,500 shares of Xerox stock at $20.00 per share plus a $550 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 $0.95 per share cash dividend on the Gem Co. stock.
28 Sold 5,000 shares of Gem Co. stock at $33.00 per share less a $590 brokerage fee.
Oct. 1 Received a $1.60 per share cash dividend on the PepsiCo shares.
Dec. 15 Received a $1.10 per share cash dividend on the remaining Gem Co. shares.
31 Received a $1.05 per share cash dividend on the PepsiCo shares.
1. Prepare journal entries to record the preceding transactions and events.
Apr. 16, 2011 debit Credit
May 1, 2011
July 7, 2011
July 20, 2011
Aug. 3, 2011
Aug. 15, 2011
Aug. 28, 2011
Oct. 1, 2011
Dec. 15, 2011
Dec. 31, 2011
Explanation / Answer
Apr. 16 Purchased 10,000 shares of Gem Co. stock at $26.25 per share plus a $500 brokerage fee. Investment - Gem Co. (Dr.) 263000 Cash (Cr.) 263000 May 1 Paid 290,000 to buy 90-day U.S. Treasury bills (debt securities): $290,000 principal amount, 5% interest, securities dated May 1. Investments - U.S. Treasury bills (Dr.) 290000 Cash (Cr.) 290000 July 7 Purchased 5,000 shares of PepsiCo stock at $50.00 per share plus a $470 brokerage fee. Investments - PepsiCo (Dr.) 250470 Cash (Cr.) 250470 20 Purchased 2,500 shares of Xerox stock at $20.00 per share plus a $550 brokerage fee. Investments - Xerox (Dr.) 50550 Cash (Cr.) 50550 Aug. 3 Received a check for principal and accrued interest on the U.S. Treasury bills that matured on July 29. Cash (Dr.) 293625 Investments - U.S. Treasury bills (Cr.) 290000 Interest revenue (Cr.) 3625 15 Received an $0.95 per share cash dividend on the Gem Co. stock. Cash (Dr.) 9500 Dividend revenue (Cr.) 9500 28 Sold 5,000 shares of Gem Co. stock at $33.00 per share less a $590 brokerage fee. Cash (Dr.) 164410 Investments - Gem Co. (Cr.) 131500 Gain on sale of investment (Cr.) 2910 Oct. 1 Received a $1.60 per share cash dividend on the PepsiCo shares. Cash (Dr.) 8000 Dividend revenue (Cr.) 8000 Dec. 15 Received a $1.10 per share cash dividend on the remaining Gem Co. shares. Cash (Dr.) 5500 Dividend revenue (Cr.) 5500 31 Received a $1.05 per share cash dividend on the PepsiCo shares. Cash (Dr.) 5250 Dividend revenue (Cr.) 5250 Hope this helps!
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