Reference no: EM132597046
Question - Bond Investment Transactions
Journalize the entries to record the following selected bond investment transactions for Starks Products:
For a compound transaction, if an amount box does not require an entry, leave it blank.
a. Purchased for cash $120,000 of Iceline, Inc. 6% bonds at 100 plus accrued interest of $1,200, paying interest semiannually.
b. Received first semiannual interest payment.
c. Sold $80,000 of the bonds at 102 plus accrued interest of $610.
Stock investment transactions
On January 23, 17,000 shares of Tolle Company are acquired at a price of $24 per share plus a $180 brokerage commission. On April 12, a $0.30-per-share dividend was received on the Tolle Company stock. On June 10, 6,600 shares of the Tolle Company stock were sold for $31 per share less a $125 brokerage commission.
Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method. Refer to the Chart of Accounts for exact wording of account titles. When required, round your answers to the nearest dollar.
Equity method
On January 2, Cohan Company acquired 40% of the outstanding stock of Sanger Company for $500,000. For the year ended December 31, Sanger Company earned income of $80,000 and paid dividends of $30,000.
Prepare the entries for Cohan Company for the purchase of the stock, the share of Sanger income, and the dividends received from Sanger Company. Refer to the Chart of Accounts for exact wording of account titles.
Equity method
On January 2, Cohan Company acquired 25% of the outstanding stock of Sanger Company for $735,000. For the year ended December 31, Sanger Company earned income of $133,400 and paid dividends of $20,600.
Prepare the entries for Cohan Company for the purchase of the stock, the share of Sanger income, and the dividends received from Sanger Company. Refer to the Chart of Accounts for exact wording of account titles.