Comprehensive Problem 4 Part 1: Selected transactions completed by Equinox Produ

Question

Comprehensive Problem 4
  Part 1:

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2014, were as follows:

1.  Journalize the selected transactions.

If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

o.  Sold 1,000 shares of Solstice Corp. at $45, including commission.

p.  Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method.

Explanation / Answer

1. Journalize the selected transactions.

o. Sold 1,000 shares of Solstice Corp. at $45, including commission.

Description Debit Credit

Cash Dr 45,000

Long Term Investment Cr 40000

Profit on Sale of available for Sale securies Cr 5000

p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method.

Disc AMortized Dr 1000

Bond Int Payable Dr 11,500

Cash Cr 12,500

(500000*5%*10+500000 -520000 = 230000

This is Paid over 10*2= 20 period.

So HY Interest = 230,000/20 = 11,500)

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