On July 1, 2018, Wolfpack Corporation purchased securities which it intends to b

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 $30,000 which were purchased for $28,500 and (b) 400 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 $2 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.

Explanation / Answer

Joural entry as on December 31:

Cash Dr 3800

Interest revenue Cr 3000 (30000*10%)

Dividend income Cr 800 (400*2)

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