Question

a. 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). b. On March 22, bought 800 shares of Fran Inc. common stock at $23 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 $39.000 cash to purchase MP Inc.'s 6%. six-month notes at par, dated July 30 (classified as trading securities) e. On September 1, received a $0.68 per share cash dividend on the Fran Inc. common stock purchased in part b f. On October 8, sold 400 shares of Fran Inc. common stock for $29 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.) View transaction list Journal entry worksheet 1 2 3 4 5 On February 15, paid $130,000 cash to purchase GMI'S 90-day notes at par, which are dated February 15 and pay 7% Interest held-to-maturity). Note: Enter debts before credits. Transaction General Journal

Answer 1

Journal Entries:

Transaction	General Journal	Debit	Credit
a)	Short-term Investments	$130,000
	Cash		$130,000
	(To record the purchase of shor-term investments)
b)	Long-term Investments (800 shares * $23)	$18,400
	Cash		$18,400
	(To record the purchase of long-term investments)
c)	Cash ($130,000 + $2,275)	$132,275
	Short-term Investments		$130,000
	Interest Revenue ($130,000*7/100*90 days/360 days)		$2,275
	(To record the receipt of cash for short-term investment along with interest)
d)	Short-term Investments	$39,000
	Cash		$39,000
	(To record the purchase of shor-term investments)
e)	Cash (800 shares * $0.68 per share)	$544
	Dividend Revenue		$544
	(To record the receipt of cash dividends on the long-term investment)
f)	Cash (400 shares * $29 per share)	$11,600
	Long-term Investments (400 shares * $23 per share)		$9,200
	Gain on sale of long-term investments ($29 - $23 = $6 * 400)		$2,400
	(To record the sale of 400 shares from long-term investment)
g)	Cash	$585
	Interest Revenue ($39,000*6/100*3/12 months)		$585
	(To record the interest revenue received)