a. On February 15, paid $200,000 cash to purchase American General\'s 90-day sho

Question

a. On February 15, paid $200,000 cash to purchase American General's 90-day short-term notes at par, which are dated February 15 and pay 7% interest (classified as held-to-maturity). b. On March 22, bought 750 shares of Fran Industries common stock at $30 cash per share plus a $150 brokerage fee (classified as long-term available-for-sale securities). c. On May 15, received a check from American General in payment of the principal and 90 days' interest on the notes purchased in transaction a. d. On July 30, paid $60,000 cash to purchase MP3 Electronics' 6% notes at par, dated July 30, 2015, and maturing on January 30, 2016 (classified as trading securities). e. On September 1, received a $0.26 per share cash dividend on the Fran Industries common stock purchased in transaction b. f. On October 8, sold 375 shares of Fran Industries common stock for $36 cash per share, less a $130 brokerage fee. g. On October 30, received a check from MP3 Electronics for three months’ interest on the notes purchased in transaction d. Prepare journal entries to record the above transactions involving both the short-term and long-term investments of Cancun Corp., all of which occurred during calendar-year 2015. Use the account Short-Term Investments for any transactions that you determine are short term. (Use 360 days in a year. Do not round your intermediate calculations.)

Explanation / Answer

Journal Entries of Cancun Corp during the year 2015 Transaction Date Accounts Debit $ Credit $ a Feb-15 Short Term Investment HTM (American general)     200,000 Cash     200,000 b Mar-22 Long Term Investment AFS (Fran Industries)       22,650 Cash((750*$30)+$150)       22,650 c May-15 Cash     203,500 Short Term Investment HTM (American general)     200,000 Interest Revenue($200,000*7%*90/360)         3,500 d Jul-30 Short Term Investment Trading(MP3 Electronics))       60,000 Cash       60,000 e Sep-01 Cash             195 Dividend Revenue(750*$0.26)             195 f Oct-08 Cash       13,370 Long Term Investment AFS (Fran Industries)(375*$30)       11,250 Gain on Sale of Long term Investment         2,120 g Oct-30 Cash             920 Interest Revenue($60,000*6%*92/360)             920

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.