In January 2014, the management of Weast Company concludes that it has sufficien

ID: 2380956 • Letter: I

Question

In January 2014, the management of Weast Company concludes that it has sufficient cash to purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred.

Feb. 1
Purchased 1,500  shares of ALF common stock for $72,000.
Mar. 1
Purchased 760  shares of LNC common stock for $28,700.
Apr. 1
Purchased 70  $1,100, 8% CRT bonds for $77,000. Interest is payable semiannually on April 1 and October 1. July 1
Received a cash dividend of $0.70  per share on the ALF common stock.
Aug. 1
Sold 500  shares of ALF common stock at $47  per share. Sept. 1
Received $2  per share cash dividend on the LNC common stock.
Oct. 1
Received the semiannual interest on the CRT bonds.
Oct. 1
Sold the CRT bonds for $82,700.

At December 31, the fair values of the ALF and LNC common stocks were $44  and $31  per share, respectively. In January 2014, the management of Weast Company concludes that it has sufficient cash to purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred.

Feb. 1
Purchased 1,500  shares of ALF common stock for $72,000.
Mar. 1
Purchased 760  shares of LNC common stock for $28,700.
Apr. 1
Purchased 70  $1,100, 8% CRT bonds for $77,000. Interest is payable semiannually on April 1 and October 1. July 1
Received a cash dividend of $0.70  per share on the ALF common stock.
Aug. 1
Sold 500  shares of ALF common stock at $47  per share. Sept. 1
Received $2  per share cash dividend on the LNC common stock.
Oct. 1
Received the semiannual interest on the CRT bonds.
Oct. 1
Sold the CRT bonds for $82,700.

At December 31, the fair values of the ALF and LNC common stocks were $44  and $31  per share, respectively. Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T account form.) Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T account form.) In January 2014, the management of Weast Company concludes that it has sufficient cash to purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred.

Feb. 1
Purchased 1,500  shares of ALF common stock for $72,000.
Mar. 1
Purchased 760  shares of LNC common stock for $28,700.
Apr. 1
Purchased 70  $1,100, 8% CRT bonds for $77,000. Interest is payable semiannually on April 1 and October 1. July 1
Received a cash dividend of $0.70  per share on the ALF common stock.
Aug. 1
Sold 500  shares of ALF common stock at $47  per share. Sept. 1
Received $2  per share cash dividend on the LNC common stock.
Oct. 1
Received the semiannual interest on the CRT bonds.
Oct. 1
Sold the CRT bonds for $82,700.

At December 31, the fair values of the ALF and LNC common stocks were $44  and $31  per share, respectively. In January 2014, the management of Weast Company concludes that it has sufficient cash to purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred. At December 31, the fair values of the ALF and LNC common stocks were $44 and $31 per share, respectively. Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T account form.)

Explanation / Answer

DEBIT ALF COMMON STOCK [1500*48] = 72000

CREDIT CASH = 72000

DEBIT LNC COMMON STOCK = 28700

CREDIT CASH = 28700

DEBIT 8% CRT BONDS [70*1100] =77000

CREDIT CASH = 77000

DEBIT CASH[1500*0.7] =1050

CREDIT DIVIDEND FROM INVESTMENT IN ALF =1050

DEBIT CASH [500*47] = 23500

DEBIT LOSS ON SALE OF ALF SHARES[500*(48-47)] = 500

CREDIT ALF COMMON STOCK [500*48] =24000

DEBIT CASH [2*760] =1520

CREDIT DIVIDEND FROM INVESTMENT IN LNC = 1520

DEBIT CASH [77000*(8%/2)] =3080

CREDIT INTEREST ON CRT BONDS = 3080

DEBIT CASH = 82700

CREDIT 8% CRT BONDS = 77000

CREDIT PROFIT ON SALE OF CRT BONDS [82700-77000] =5700