Question

Robby Robots has decided to investits excess cash in the following invest Jan. 10 Feb. 13 Mar. 1 Mar. 1 Purchased 000 shares of Lion Country Safari for 53.25 per share does not have significant influence over Lion Country Safari Purchased 3396 of the stock of Birdie Hats consisting of 33.000 shares (out of 100,000 shares) for 55 per share Roby Robots does have influence over Birdie Hats Purchased a semiannual bond from the City of Ocala with a face values of which pays 6.496 APR (Next interest payment is August 1 Robby Robots to hold the bond to maturity. Purchased a semiannual bond from Camelot Canoes with a face value of 550,000 which pay 7.5% APR. (Next interest payment is August 1) Robby Robots classifies these bonds as trading investments Purchased a semiannual bond from the US treasury with a face value of $10.000 which pays 5.0% APR (Next interest payment is August 1) Robby Robots classifies this bond as available for sale. Birdie Hats pays a dividend of $1.25 per share. Lion Country Safari pays a dividend of 0.25 per share. Birdie Hats pays a dividend of $1.35 per share. Mar. 1 June 1 Nov Dec. 1 At year's end, the investments are worth: Lion Country Safari, 53.50 per share, reporting net income of $2,500,000 Birdie Hats, 55.10 per share, reporting net income of $1,000,000. City of Ocala Bond is worth $81,500. Camelot Canoes is worth $48,000. U.S. Treasury bond is worth $11,000 1. Journalize all transactions relating to these investments including purchase, dividend payouts, interest payouts, adjustment to value (at Dec. 31). 2. Determine the effect on Robby Robot's net income for the year of each of the investments Lion Country Safari Date Account

Answer 1

Journal Entries in the books of Robby Robert Date Particulars 10-Jan Lion Country Safari Alc To Cash A/C Being Lion County Safari shares purchased Debit Credit 26000 26000 165000 13-Feb Birdie Hats Alc To Cash A/C Being Birdie Hats shares purchased 165000 80000 1-Mar City of Ocals Alc To Cash A/C Being 6.4% City of Ocals bond purchased 80000 50000 1-Mar Camelot Canoes A/c To Cash A/C Being 7.5% Camelot Canoes bond purchased 50000 100001 1-Mar U.S. treasury bond A/c To Cash A/C Being 5% U.S. Treasury bond purchased 41250 1-Jun Cash A/C To Dividend Payout Alc Being Divendend declared by Birdie [email protected]$(33000*1.25S-41250) 41250 2133.33 1-Aug Cash A/C To Interest payout A/c Being City of Ocals Interest paid for 5 months (80000*6.4%"5/12=2133.33) 2133.33 1562.5 1-Aug Cash A/C To Interest payout Alc Being Camelot Canoes Interest paid for 5 months (50000*7.5%*5/12=1562.5) 1562.5 208.33 1-Aug Cash A/C To Interest payout A/C Being U.S. Treasury Bond Interest paid for 5 months (10000*5%*5/12-208.33) 2000 1-Nov Cash A/C To Dividend Payout A/C Being Divendend declared by Loin Country Saffari @.25$ (8000*0.25=2000) 44550 1-Dec Cash A/C To Dividend Payout A/c Being Divendend declared by Birdie [email protected]$(33000*1.35S=44550)

426.6667 31-Aug Cash A/C | To Interest payout Alc Being City of Ocals Interest paid for 1 month (80000*6.4%*1/12=426.6667) 312.5 31-Aug Cash A/C To Interest payout A/C Being Camelot Canoes Interest paid for 1 month (50000*7.5%*1/12=312.5) 41.6667 31-Aug Cash A/C To Interest payout Alc Being U.S. Treasury Bond Interest paid for 1 month (10000*5%* 1/12-41.6667) 41.6667 815001 31-Aug Cash A/C To City of Ocala Alc To Revenue Alc Being City of Ocala Bond matured and proft of $ 1500 Credited revenue A/C 80000 1500 48000 2000 31-Aug Cash A/C Revenue Alc To Camelot Canoes Alc Being Camelot Canoes Bond matured and loss of $ 2000 Debited revenue Alc 50000 11000 31-Aug Cash A/C To U.S Treasury A/C To Revenue A/C Being U.S Treasury Bond matured and proft of $ 1000 Credited revenue A/c 10000 1000 2000 31-Dec Lion Country Safari A/c To Revenue A/C Being Increased value of 0.25$ per share credited (8000*0.25=2000) 31-Dec Birdie Hats Alc To Revenue A/C Being Incresed value of 0.10$ per share debited (33000*0.10=3300) 3300 3300

Net Income Effect in Robby Robots Books: Lion Country Safari A/c Income Date Particulars 1-Nov Dividend payout A/c 31-Dec Revenue Alc Net Income from Lion Country Safari 4000 Birdie Hats Alc Date Particulars 1-Jun Dividend payout Alc 1-Dec Dividend payout Alc 31-Dec Revenue Alc Net Income from Birdie Hats Income 41250 44550 3300 89100 City of Ocals Alc Date Particulars 1-Aug Interest payout Alc 31-AugInterest payout A/c 31-Dec Revenue A/C Net Income from City Of Ocals Income 2133.33 426.667 1500 4060 Camelot Canoes Alc Date Particulars 1-Aug Interest payout A/c 31-Aug Interest payout Alc 31-Dec Revenue Alc Net loss from Camelot Canoes Income 1562.5 312.5 -2000 -1251 U.S. Treasury A/C Date Particulars 1-Aug|Interest payout Alc 31-Aug Interest payout Alc 31-Dec Revenue A/C Net Income from U.S. Treasury Income 208.33 41.6667 1000 1250

Net Income Effect in Robby Robots Books: Name of the Company Lion Country Safari Birdie Hats City of Ocals Camelot Canoes U.S. Treasury Net Income from all companies Income 4000 89100 4060 -125 1250 98285