On July 1, 2018, Wolfpack Corporation purchased securities which it intends to b
ID: 2542057 • Letter: O
Question
On July 1, 2018, Wolfpack Corporation purchased securities which it intends to buy and sell frequently. These securities consisted of (a) Todd Corporation 10%, 5-year bonds with a face value of $20,000 which were purchased for $18,500 and (b) 300 shares of Cornett Company common stock which were purchased at $40 per share. Assume that on December 31, 2018, Wolfpack received interest on the Todd Corporation bonds as well as a $3 dividend per share interest on the Cornett Company stock. Required: Prepare the December 31 journal entries to record the receipt of the interest and the receipt of the dividends.
Prepare the December 31 journal entries to record the receipt of the interest and the receipt of the dividends.
Explanation / Answer
DATE DESCRIPTION POST REF. DEBIT CREDIT 31-Dec-18 Bank $1000 =+(20000*0.1)/2 =$1000 interest to Interest Revenue $1000 (Being interest received) 31-Dec-18 Interest Revenue $150 =1500/(5*2) =$150 discount amortization to Discount on bonds $150 (Being discount amortized) 31-Dec-18 Bank $900 =3*300 =$900 dividend received to Dividend received $900 (Being dividend received from Cornett co.)
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