Selected transactions completed by Equinox Products Inc. during the fiscal year
ID: 2427665 • Letter: S
Question
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2016, were as follows:
Record on journal page 10:
Record on journal page 11:
The fair value for Solstice Corp. stock was $39.02 per share on December 31, 2016. The investment is adjusted to fair value, using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero.
1. Journalize the selected transactions. Refer to the Chart of Accounts for exact wording of account titles. Scroll down for journal page 11.
Journal 10
Journal 11
Jan. 3 Issued 15,000 shares of $20 par common stock at $30, receiving cash. Feb. 15 Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash. May 1 Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. 16 Declared a dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. Journalize this transaction as a single entry. 26 Paid the cash dividends declared on May 16. Jun. 1 Purchased 7,500 shares of Solstice Corp. at $40 per share, plus a $150 brokerage commission. The investment is classified as an available-for-sale investment. 8 Purchased 8,000 shares of treasury common stock at $33 per share. 22 Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for $24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment. 30 Declared a $1.00 cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock were outstanding. Jul. 11 Paid the cash dividends declared on Jul. 11 to the preferred stockholders. Aug. 27 Received $27,500 dividend from Pinkberry Co. investment of Jun. 22.Explanation / Answer
Journal 10
Date
Description
Post. Ref
Debit
Credit
Jan 3
cash
450000
Common stock
300000
Paid-In Capital in Excess of Par Value, Common Stock
150000
Feb 15
cash
400000
Preferred stock
320000
Paid-In Capital in Excess of Par Value, preferred Stock
80000
May 1
Cash
520000
Bonds payable
500000
Premium on bonds payable
20000
May 1
Interest expense
11500
Premium on bond payable
1000
cash
12500
May 16
Cash dividends
70000
Cash dividend payable
70000
(.50*100000+1*20000)
May 26
Cash dividend payable
70000
Cash
70000
Jun 1
Available for Sale Investments
300150
Cash (7,500 x $40+ $150)
300150
Jun 8
Treasury common stock
264000
cash
264000
Jun 22
Investment in pink berry co,
960000
Cash (40,000 x $24)
960000
Jun 30
Cash dividends($1*20000)
20000
Cash dividend payable
20000
Jul 11
Cash dividend payable
20000
cash
20000
27 aug
cash
27500
Investment in pink berry co,
27500
Journal 11
Date
Description
Post. Ref
Debit
Credit
Oct 1
cash
90000
Bonds payable
90000
Oct 1
Interest payable
375
Interest expense
4125
cash
4500
Oct 7
Cash (2600*$38)
98800
Treasury stock (2600*$33)
85800
Paid-in capital from sale of treasury stock
13000
Oct 14
Cash (700*0.60)
4500
Dividend revenue
4500
0ct 29
cash
45000
Investments-Solstice Corp
45000
Dec 31
Interest expense
375
Interst payable
375
Date
Description
Post. Ref
Debit
Credit
Jan 3
cash
450000
Common stock
300000
Paid-In Capital in Excess of Par Value, Common Stock
150000
Feb 15
cash
400000
Preferred stock
320000
Paid-In Capital in Excess of Par Value, preferred Stock
80000
May 1
Cash
520000
Bonds payable
500000
Premium on bonds payable
20000
May 1
Interest expense
11500
Premium on bond payable
1000
cash
12500
May 16
Cash dividends
70000
Cash dividend payable
70000
(.50*100000+1*20000)
May 26
Cash dividend payable
70000
Cash
70000
Jun 1
Available for Sale Investments
300150
Cash (7,500 x $40+ $150)
300150
Jun 8
Treasury common stock
264000
cash
264000
Jun 22
Investment in pink berry co,
960000
Cash (40,000 x $24)
960000
Jun 30
Cash dividends($1*20000)
20000
Cash dividend payable
20000
Jul 11
Cash dividend payable
20000
cash
20000
27 aug
cash
27500
Investment in pink berry co,
27500
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