Raiders Co engaged in the following investment transactions during 2012: Feb 17:

Question

Raiders Co engaged in the following investment transactions during 2012:

Feb 17: Purchased 500 shares of Med Co's common stock for $20 per share plus a brokerage fee of $100. These shares are classified as trading securities

April 1: Bought 30,000 of the 100,000 outstanding shares of Mets Co. for $300,000.

June 25: Received a $1.20 per share dividend on Med Co stock.

June 30: Received a $0.10 per share dividend on Mets Co stock.

Oct 1: Purchased 2,000 shares of Jets Co. for $15 per share plus a brokerage fee of $400. These shares are classified as available for sale.

Dec 31: Med Co. shares are selling for $25, Jets stocks are selling for $12 and Mets stock are selling for $14. Med Co. reported $80,000 net income, Mets Co. reported net income of $100,000 and Jets reported net income of $90,000.

Required: Prepare the appropriate journal entries to record the transactions for the year including year end adjustments. You must show calculations to receive credit.

Explanation / Answer

Journal Entry 17-Feb Securities Share A/C dr. 10000 Brokerage A/C dr. 100 To Cash 10100 01-Apr Otstanding Share A/C dr.                 300,000 To cash       300,000 25-Jun Cash A/C dr. 600 To Dividend 600 30-Jun Cash A/C dr. 3000 To Dividend 3000 01-Oct Share Available for sale A/C dr. 30000 Brokerage A/C dr. 400 To Cash 30400 31-Dec Cash A/C dr. (25*500+2000*12+30000*14)                 456,500 Loss on shares available for sale (2000*3) 6000 To Securities Share 10000 To Outstanding Share       300,000 To Share available for sale 30000 To Profit on sale od Securites share (500*(25-20) 2500 To Profit on sale od Outstanding share (30000*(14-10) 120000

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