Question

Live Large Inc. had the following transactions involving non-strategic investments during 2020.

2020
Apr.	1		Paid $112,000 to buy a 90-day term deposit, $112,000 principal amount, 6.0%, dated April 1.
	12		Purchased 4,200 common shares of Blue Balloon Ltd. at $23.00.
June	9		Purchased 3,000 common shares of Purple Car Corp. at $50.50.
	20		Purchased 1,300 common shares of Yellow Tech Ltd. at $16.50.
July	1		Purchased for $79,752 a 8.0%, $77,000 Space Explore Inc. bond that matures in eight years when the market interest rate was 7.4%. Interest is paid semiannually beginning December 31, 2017. Live Large Inc. plans to hold this investment until maturity.
	3		Received a cheque for the principal and accrued interest on the term deposit that matured on June 30.
	15		Received a $0.95 per share cash dividend on the Blue Balloon Ltd. common shares.
	28		Sold 2,100 of the Blue Balloon Ltd. common shares at $26.75.
Sept.	1		Received a $2.30 per share cash dividend on the Purple Car Corp. common shares.
Dec.	15		Received a $1.35 per share cash dividend on the remaining Blue Balloon Ltd. common shares owned.
	31		Received the interest on the Space Explore Inc. bond.
	31		The fair values of Live Large Inc.’s investments on this date were Blue Balloon shares, $25.80; Purple Car Corp. shares, $43.55; Yellow Tech shares, $19.05. Assume the fair value and the carrying value of the Space Explore bond were equal.
2021
Feb.	16		Sold the remaining Blue Balloon shares at $27.00.

. Prepare journal entries to record the preceding transactions.

Answer 1

Journal Entries

April 1

Term Deposit A/c Dr   $112,000

             To Cash or bank A/c $112,000

(The cash paid Paid $112,000 to buy a 90-day term deposit, $112,000 principal amount, 6.0%)

April 12

Investment in shares A/c Dr 96,600

          To Cash or bank A/c 96,600

(Purchased 4,200 common shares of Blue Balloon Ltd. at $23.00.)

June 9

Investment in shares A/c Dr 151,500

          To Cash or bank A/c 151,500

(Purchased 3,000 common shares of Purple Car Corp. at $50.50)

June 20

Investment in shares A/c Dr 21,450

          To Cash or bank A/c 21,450

(Purchased 1,300 common shares of Yellow Tech Ltd. at $16.50.)

July 1

Investments in Bonds A/c Dr 79,752

           To Cash or Bank A/c 79,752

(Purchased for $79,752 a 8.0%, $77,000 Space Explore Inc. bond that matures in eight years when the market interest rate was 7.4%.)

Jun 3

Cash or Bank A/c Dr 118,720

             To term Deposit A/c 112,000

             To Interest income A/c 6,720

(Received a cheque for the principal and accrued interest on the term deposit that matured on June 30.)

July 15

   Cash or Bank A/c Dr 3,990

            To Dividend received A/c 3,990

(Received a $0.95 per share cash dividend on the Blue Balloon Ltd. 4220 common shares)

July 28

     Cash or Bank A/c Dr 56,175

               To Investment in shares A/c 56,175

(Sold 2,100 of the Blue Balloon Ltd. common shares at $26.75.)

Sept 1

Cash or Bank A/c Dr 6,900

            To Dividend received A/c 6,900

(Received a $2.30 per share cash dividend on the Purple Car Corp. 3,000 common shares.)

Dec 15

Cash or Bank A/c Dr 6,900

            To Dividend received A/c 6,900

(Received a $1.35 per share cash dividend on the remaining Blue Balloon Ltd. common shares owned.)

Dec 31

Cash or Bank A/c Dr 3,080

      To Interest income on bonds A/c 3,080

(Received the interest on the Space Explore Inc. bond. Received in semiannually)

Feb 16

Cash or Bank A/c Dr 56,700

               To Investment in shares A/c 56,700

(Sold the remaining 2,100 Blue Balloon shares at $27.00.)