Reference no: EM133157251
Question 1 - Carlsville Company began operations in the current year and had no prior stock investments. The following transactions are from its short-term stock investments with insignificant influence. Prepare journal entries to record these transactions. On December 31, prepare the adjusting entry to record the fair value adjustment for the portfolio of stock investments.
July 22 Purchased 1,600 shares of Hunt Corporation at $20 per share.
September 5 Received a $2 cash dividend for each share of Hunt Corporation.
September 27 Purchased 3,500 shares of HCA at $24 per share.
October 3 Sold 1,600 shares of Hunt at $15 per share.
October 30 Purchased 1,300 shares of Black & Decker at $48 per share.
December 17 Received a $3 cash dividend for each share of Black & Decker.
December 31 Fair value of the short-term stock investments is $151,000.
Question 2 - Transactions in held-to-maturity, trading, and stock investments
1. On February 15, paid $130,000 cash to purchase GMI's 90-day short-term notes at par, which are dated February 15 and pay 7% interest (classified as held-to-maturity).
2. On March 22, bought 650 shares of Fran Incorporated common stock at $22 cash per share. Cancun's stock investment results in it having an insignificant influence over Fran.
3. On May 15, received a check from GMI in payment of the principal and 90 days' interest on the notes purchased in part a.
4. On July 30, paid $39,000 cash to purchase MP Incorporated's 6% , six-month notes at par, dated July 30 (classified as trading securities).
5. On September 1, received a $0.28 per share cash dividend on the Fran Incorporated common stock purchased in part b.
6. On October 8, sold 325 shares of Fran Incorporated common stock for $28 cash per share.
7. On October 30, received a check from MP Incorporated for three months' interest on the notes purchased in part d.
Prepare journal entries to record the above transactions involving both the short-term and long-term investments of Cancun Corporation, all of which occurred during the current year. (Use 360 days in a year. Do not round your intermediate calculations. Round your answers to the nearest whole dollar.)
Question 3 - Listed below are a few events and transactions of Kodax Company.
Year 1
January 2 Purchased 85,000 shares of Grecco Company common stock for $491,000 cash. Grecco has 255,000 shares of common stock outstanding, and its activities will be significantly influenced by Kodax.
September 1 Grecco declared and paid a cash dividend of $2.10 per share.
December 31 Grecco announced that net income for the year is $498,900.
Year 2
June 1 Grecco declared and paid a cash dividend of $2.90 per share.
December 31 Grecco announced that net income for the year is $720,400.
December 31 Kodax sold 14,000 shares of Grecco for $125,000 cash.
Prepare journal entries to record the above transactions and events of Kodax Company.
Question 4 - BGJ Corporation had no short-term investments prior to this year. It had the following transactions this year involving short-term stock investments with insignificant influence.
April 16 Purchased 4,500 shares of OnPoint Company stock at $30 per share.
July 7 Purchased 3,000 shares of Eco Company stock at $55 per share.
July 20 Purchased 1,400 shares of Lafayette Company stock at $22 per share.
August 15 Received an $1.10 per share cash dividend on the OnPoint Company stock.
August 28 Sold 2,700 shares of OnPoint Company stock at $33 per share.
October 1 Received a $5.20 per share cash dividend on the Eco Company shares.
December 15 Received a $1.30 per share cash dividend on the remaining OnPoint Company shares.
December 31 Received a $4.60 per share cash dividend on the Eco Company shares.