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14 Aug 2018

Rose Company had no short-term investments prior to year 2013.It had the following transactions involving short-term investmentsin available-for-sale securities during 2013.

Apr. 16 Purchased 4,000 shares of Gem Co. stock at $25.75 pershare plus a $400 brokerage fee.

May 1 Paid $160,000 to buy 90-day U.S. Treasury bills (debtsecurities): $160,000 principal amount, 5% interest, securitiesdated May 1.

July 7 Purchased 2,000 shares of PepsiCo stock at $49.00 pershare plus a $370 brokerage fee.

July 20 Purchased 1,000 shares of Xerox stock at $15.00 pershare plus a $450 brokerage fee.

Aug. 3 Received a check for principal and accrued interest onthe U.S. Treasury bills that matured on July 29.

Aug.15 Received an $0.95 per share cash dividend on the Gem Co.stock.

Aug. 28 Sold 2,000 shares of Gem Co. stock at $32.50 per shareless a $490 brokerage fee.

Oct. 1 Received a $2.00 per share cash dividend on the PepsiCoshares.

Dec. 15 Received a $1.10 per share cash dividend on theremaining Gem Co. shares.

Dec. 31 Received a $1.20 per share cash dividend on the PepsiCoshares.

1. Prepare journal entries to record the preceding transactionsand events.

2. Prepare a table to compare the year-end cost and fair valuesof Perry’s short-term investments in available-for-sale securities.The year-end fair values per share are: Gem Co., $28.00; PepsiCo,$46.25; and Xerox, $12.00.

3. Prepare an adjusting entry, if necessary, to record theyear-end fair value adjustment for the portfolio of short-terminvestments in available-for-sale securities.

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16 Aug 2018

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Perry Company had no short-term investments prior to year 2011. Ithad the following transactions involving short-term investments inavailable-for-sale securities during 2011.



Apr. 16 Purchased 8,000 shares of Gem Co. stock at $24.25 per shareplus a $360 brokerage fee.
May 1 Paid $200,000 to buy 90-day U.S. Treasury bills (debtsecurities): $200,000 principal amount, 6% interest, securitiesdated May 1.
July 7 Purchased 4,000 shares of PepsiCo stock at $49.25 per shareplus a $350 brokerage fee.
20 Purchased 2,000 shares of Xerox stock at $16.75 per share plus a$410 brokerage fee.
Aug. 3 Received a check for principal and accrued interest on theU.S. Treasury bills that matured on July 29.
15 Received an $0.85 per share cash dividend on the Gem Co.stock.
28 Sold 4,000 shares of Gem Co. stock at $30 per share less a $450brokerage fee.
Oct. 1 Received a $1.90 per share cash dividend on the PepsiCoshares.
Dec. 15 Received a $1.05 per share cash dividend on the remainingGem Co. shares.
31 Received a $1.30 per share cash dividend on the PepsiCoshares.


Prepare journal entries to record the preceding transactions andevents.

Prepare journal entries to record the following transactionsinvolving both the short-term and long-term investments of SophiaCorp., all of which occurred during calendar year 2011. Use theaccount Short-Term Investments for any transactions that youdetermine are short term.





a.

On February 15, paid $150,000 cash to purchase American General's120-day short-term notes at par, which are dated February 15 andpay 10% interest (classified as held-to-maturity).



b.

On March 22, bought 700 shares of Frain Industries common stock at$25 cash per share plus a $250 brokerage fee (classified aslong-term available-for-sale securities).



c.

On May 15, received a check from American General in payment of theprincipal and 120 days' interest on the notes purchased intransaction a.



d.

On July 30, paid $50,000 cash to purchase MP3 Electronics' 8% notesat par, dated July 30, 2011, and maturing on January 30, 2012(classified as trading securities).



e.

On September 1, received a $0.50 per share cash dividend on theFrain Industries common stock purchased in transactionb.



f.

On October 8, sold 350 shares of Frain Industries common stock for$32 cash per share, less a $175 brokerage fee.



g.

On October 30, received a check from MP3 Electronics for threemonths' interest on the notes purchased in transactiond.

On January 5, 2014, Phil's Corporation received a chartergranting the right to issue 5,000 shares of $100 par value, 8%cumulative and nonparticipating preferred stock, and 50,000 sharesof $10 par value common stock. It then completed thesetransactions.

Jan 11 - Issued 20,000 shares of common stock at $16 pershare

Feb 1 - Issued to Sands Corp. 4,000 shares of preferred stockfor the following assets: equipment with a fair value of $50,000; afactory building with a fair value of $160,000; and land with anappraised value of $270,000.

July 29 - Purchased 1,800 shares of common stock at $17 pershare. (Use cost method.)

Aug 10 Sold the 1,800 treasury shares at $14 per share

Dec 31 - Declared a $0.25 per share cash dividend on the commonstock and declared the preferred dividend.

Dec 31 - Closed the income summary account. There was a $175,700net income.

Instructions:

(a) Record the journal entries for the transactions listedabove

(b) Prepare the stockholders' equity section of Phil'scorporation's balance sheet as of December 31, 2014.

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