Exercise 17-11 (Part Level Submission) Sandhill Corporation made the following c
ID: 2538501 • Letter: E
Question
Exercise 17-11 (Part Level Submission) Sandhill Corporation made the following cash purchases of securities during 2017, which is the first year in which Sandhill invested in securities. 1. On January 15, purchased 10,120 shares of Sanchez Company's common stock at $46.90 per share plus commission $2,100. 2. On April 1, purchased 5,120 shares of Vicario Co.'s common stock at $72.80 per share plus commission $3,490 3. On September 10, purchased 7,120 shares of WTA Co.'s preferred stock at $37.10 per share plus commission $5,030 On May 20, 2017, Sandhill sold 4,120 shares of Sanchez Company's common stock at a market price of $49 per share less brokerage commissions, taxes, and fees of $3,970. The year-end fair values per share were Sanchez $42, Vicario $77, and WTA $39.20. In addition, the chief accountant of Sandhill told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases. (a) Prepare the journal entries to record the above three security purchases. (Round answers to O decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Credit (1) Jan. 15, 2017 Equity Investments Cash (2) | Apr 1, 2017 | Equity Investments Cash (3) | Sep. 10, 2017 Equity Investments CashExplanation / Answer
No.
Date
Accounts title and explanation
Debit ($)
Credit ($)
1
15-Jan-17
Equity investments
476728
Cash
476728
(being equity of Sanchez company purchased)
2
01-Apr-17
Equity investments
376226
Cash
376226
(Being equity of Sanchez company purchased)
3
10-Sep-17
Equity investments
269182
Cash
269182
(being equity of Sanchez company purchased)
It is important to note that only the three purchases have been recorded in the books of accounts.
Workings:
No.
1
Sanchez company
10,120 shares @46.90 per share
474628
Add: commission paid
2100
Cost of investment
476728
2
Vicario company
5120 shares @72.80 per share
372736
Add: commission paid
3490
Cost of investment
376226
3
WTA company
7120 shares @37.10
264152
Add: commission paid
5030
Cost of investment
269182
No.
Date
Accounts title and explanation
Debit ($)
Credit ($)
1
15-Jan-17
Equity investments
476728
Cash
476728
(being equity of Sanchez company purchased)
2
01-Apr-17
Equity investments
376226
Cash
376226
(Being equity of Sanchez company purchased)
3
10-Sep-17
Equity investments
269182
Cash
269182
(being equity of Sanchez company purchased)
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