Arantxa corporation-equity securities journal entries

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Reference no: EM1344512

Arantxa Corporation made following cash buys of securities throughout 2008, which is the first year in which Arantxa invested in securities.

1. On January 15, bought 10,000 shares of Sanchez Company's common stock at $33.50 per share plus commission $1,980.

2. On April 1, bought 5,000 shares of Vicaio Co.'s common stock at $52.00 per share plus commission $3,370.

3. On September 10, bought 7,000 shares of WTA Co.'s preferred stock at $26.50 per share plus commission $4,910.

On May 20, 2008, Arantxa sold 4,000 shares of Sanchez Company's common stock at a market price of $35 per share less brokerage commissions, taxes, and fees of $3,850. The year-end fair values per share were: Sanchez $30, Vicario $55, and WTA $28. In addition, the chief accountant of Arantxa told you that Arantxa Corporation plans to hold these securities for the long term but may sell them in order to earn profits from appreciation in prices.

INSTRUCTIONS:

A) Make the journal entries to record the above three securities purchases.

B) Make the journal entry for the security sale on May 20.

C) Compute the unrealized gains or losses and prepare the adjusting entry for Arantxa on December 31, 2008.

Reference no: EM1344512

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