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Preparing journal entries for transactions

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Reference no: EM13122705

The information below relates to Milton Company's trading securities in 2010 and 2011.

(a) Prepare the journal entries for the following transactions.

May 1, 2010 Purchased $250,000 par value of GLF Company bonds at 97 plus accrued interest. The bonds pay interest annually at 9% each December 31. Broker's commission was $2,500.

September 1, 2010 Sold $125,000 par value of GLF Company bonds at 94 plus accrued interest. Broker's commission, taxes, and fees were $1,250.

September 5, 2010 Purchased 5,000 shares of Hayes, Inc. common stock for $25 per share. The broker's commission on the purchase amounted to $2,000.

December 31, 2010 Make the appropriate entry for the GLF Company bonds.

December 31, 2010 The market prices of the trading securities at December 31 were: Hayes, Inc. common stock, $26 per share; and GLF Company bonds, 99. Make the appropriate entry.

July 1, 2011 Milton sold 1/2 of the Hayes, Inc. common stock at $27 per share. Broker's commissions, taxes, and fees were $1,000.

December 1, 2011 Milton purchased 600 shares of Ramirez, Inc. common stock at $40 per share. Broker's commission was $500.

December 31, 2011 Make the appropriate entry for the GLF Company bonds.

December 31, 2011 The market prices of the trading securities at December 31 were: Hayes, Inc. common stock, $28 per share; GLF Company bonds, 98; and Ramirez, Inc. common stock, $42 per share. Make the appropriate entry.

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In this solution we have passes journal entry for purchase and sale of bond, purchase and sale of common stock, and revaluation of bond at the end of financial year.

Reference no: EM13122705

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