Question

Journal entries - Prepare all lournal entries on the journal paper provided at the end of the exam. You may tear off the lournal paper if you'd like. Be sure to put your name or each page - no need to rest them. Enter the question number in the date column of the journal. Skip one row between each transaction. Do not abbreviate account names in the journal - they must appear exactly as they do in the chart of accounts that follows. Enter BLANK if no journal entry is required for a transaction. Cash Building Depreciation Expense Discount on Bond Investment Dividends Revenue Fair Value Adjustment Gain on Sale of Investment * Holding Gain- * Holding Loss- Interest Expense Interest Rate Swap Interest Revenue CHART OF ACCOUNTS Investment in COMPANY NAME Bonds Investment in COMPANY NAME Stock Investment Revenue Notes Payable Loss on Sale of Investment Premium on Bond Investment • Reclassification Adjustment - • Unrealized Holding Gain - • Unrealized Holding Loss - *You must specify what comes after the hyphen in these accounts - it is required to be correct. For all transactions, assume investments are adjusted to fair value only when it is REQUIRED. If not journal entry is required, enter "BLANK" in the journal. Transactions 11 through 15 relate to one another. Prepare the journal entries as necessary. 11. Dakota Co. purchases 6% of Jersey Corp. stock as an investment for $450,000. 12. Jersey Corp. pays dividends of $26,000 to ALL its investors. 13. Jersey Corp. reports net income of $310,000 on 12/30/18. R ad usted EU 14. The fair value of the Jersey Corp. stock investment on 12/31/18 is $432,000. NO J e g 15. Dakota Co. sells all the Jersey Corp. stock for $457,000 on 5/1/19. Transactions 16 through 20 relate to one another. Prepare the journal entries as necessary. 16. Mexico Co. purchases 25% of Vegas Corp. stock as an investment for $720,000. 17. Vegas Corp. pays dividends of $44,000 to ALL its investors. 18. Vegas Corp. reports net income of $360,000 on 12/30/18. 19. The fair value of the Vegas Corp. stock investment on 12/31/18 is $743,000. 20. Mexico Co. sells all the Vegas Corp. stock for $792,000 on 5/1/19. 21 hariah 32

Answer 1

Journal Entries:
Date	Accounts Title	Debit $	Credit $
11	Investment in Jersey Corp. stock	450000
	Cash		450000
	(being purchase of 6% stock )
12	Cash	1560			26000*6%
	Dividends Revenue		1560
	(being dividend recd. On investment)
12/30/2018	NO ENTRY
12/31/2018	Unrealized Holding Loss	18000
	Investment in Jersey Corp. stock		18000
	(being fair value adjustment made at year end)
5/1/2019	Cash	457000
	Investment in Jersey Corp. stock		432000
	Unrealized Holding Loss		18000
	Gain on Sale of Investment		7000
	(gain on sale of investment)
Journal Entries:
Date	Accounts Title	Debit $	Credit $
16	Investment in Jersey Corp. stock	720000
	Cash		720000
	(being equity investment purchase of 25% stock )
17	Cash	11000			44000*25%
	Investment in Jersey Corp. stock		11000
	(being dividend recd. Adjusted to investment account)
12/30/2018	Investment in Jersey Corp. stock	77500			310000*25%
	Net Income of Jersey		77500
	(being investment account adjusted with income of Jersey)
12/31/2018	NO ENTRY	18000
5/1/2019	Cash	792000
	Investment in Jersey Corp. stock		786500		720000-11000+77500
	Gain on Sale of Investment		5500
	(gain on sale of investment)