Question

Exercise 15-11 Transactions in held-to-maturity, trading, and stock investments LO P1, P2, P4 E a. On February 15, paid $150,000 cash to purchase GMI's 90-day short-term notes at par, which are dated February 15 and pay 11% interest (classified as held-to-maturity). b. On March 22, bought 550 shares of Fran Inc. common stock at $34 cash per share. Cancun's stock investment results in it having an insignificant influence over Fran. c. On May 15, received a check from GMI in payment of the principal and 90 days' interest on the notes purchased in part a. d. On July 30, paid $45,000 cash to purchase MP Inc.'s 10%, six-month notes at par, dated July 30 (classified as trading securities). e. On September 1, received a $0.58 per share cash dividend on the Fran Inc. common stock purchased in part b. f. On October 8, sold 275 shares of Fran Inc. common stock for $40 cash per share. g. On October 30, received a check from MP Inc. 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 Corp., 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.)

Answer 1

Date General Journal Credit Debit 150,000 $ 15-Feb Short-term investments Cash $ 150,000 b $ 18,700 $ 18,700 $ 154,125 22-Mar stock investments Cash {550 x 34) 15-May Cash Interest revenue (150,000 * 11% * 90/360) Short-term investments - HTM (A.G.) 30-Jul Short-term investments - Cash $ $ 4,125 150,000 d $ 45,000 $ 45,000 $ 319 319 $ 11,000 e 01-Sep Cash Dividend revenue (500 * 0.58) 08-OctCash (275 x 40) stock investments Gain on sale of long-term investments gl 30-OctCash (33,000 * 7% * 3/12) Interest revenue $ $ 9,350 1,650 1,125 $ 1,125