05 Jun Question Prepare Journal Entries for the
Question
Prepare Journal Entries for the following transactions involving both the short term and long term investments of Cancun Corp., all of which occurred in the calendar year 2008. Use the account Short-Term Investments for any transactions that you determine are short term.
A) On February 15, paid $160,000 cash to purchase American General’s 90-day short-term notes at par, which are dated February 15th and pay 10% interest (classified as held-to-maturity)
B) On March 22, bought 700 shares of Fran Industries common stock at $51cash 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 principle and 90 days’ interest on the notes purchased in transaction a
D) on July 30, paid $100,000 cash to purchase MP3 electronics’ 8% notes at par, dated July 30, 2008, and maturing on January 30, 2009 (classified as trading securities)
E) on September 1, received a $1 per share cash dividend on the Fran Industries common stock purchased in transaction b
F) on October 8, sold 350 shares of Fran Industries common stock for $64 cash per share, less a $125 brokerage fee
G) On October 30 , received a check from MP3 electronics for three months’ interest on the notes purchased in transaction D.
On December 31,2008.Lujack Co. held the following short term available for sale securities.
Cost
Market Value
Nintendo Co. Common Stock
44,450
48,900
Atlantic Richfield Co. Bonds Payable
49,000
47,000
Kellogg Co. Notes Payable
25,000
23,200
McDonald’s Corp. common stock
46,300
44,800
Lujack had no short-term investments prior to the current period. Prepare the December 31, 2008, year end adjusting entry to record the market adjustment for these entries.
Pilsen Co. began operations in 2007. The cost and market values for it’s long term investments portfolio is available for sale securities are shown below. Prepare Pilsen’s December 31, 2008 adjusting entry to reflect any necessary market adjustment for these investments.
Cost
Market Value
December 31, 2007
87,855
80,293
December 31, 2008
89,980
90,980
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