Question

Prepare journal entries to record the following transactions involving the short-term securities invest- ments of Blake Co., all of which occurred during year 2008. a. On February 15, paid $120,000 cash to purchase RTF's 90-day short-term debt securities ($120,000 principal), dated February 15, that pay 8% interest (categorized as held-to-maturity securities). b. On March 22, purchased 700 shares of XIF Company stock at $27.50 per share plus a $150 broker- age fee. These shares are categorized as trading securities. c. On May 16, received a chcek from RTF in payment of the principal and 90 days' interest on the debt securities purchased in transaction a. d. On August 1, paid $80,000 cash to purchase Flash Co.'s 10% debt securities ($80,000 principal), dated July 30, 2008, and maturing January 30, 2009 (categorized as available-for-sale securities). e. On September 1, received a $1.00 per share cash dividend on the XIF Company stock purchased in transaction b. f. On October 8, sold 350 shares of XIF Co. stock for $34 per share, less a $140 brokerage fee. g. On October 30, received a chock from Flash Co. for 90 days' interest on the debt securities purchased in transaction d.

Answer 1

JOURNAL ENTERIES

A. RTF's Securities A/C   DR          120000        15/02

          TO Cash A/C                       120000

    (Being Securities Purchased)

B. XIF Shares A/C      DR                19400         22/03

         TO Cash A/C                         19400

   (Being Shares Purchased)

C. RTF A/C                   DR            122367        15/05

   TO RTF Securites A/C          120000

   TO Interest Recievable A/C    2367     

(Being Securities Matured)

Bank A/C                 DR              122367

     TO RTF A/C                             122367

(Being Cheque recieved for the securities matured)

D. Flash CO. Securities A/C           80000

       TO Bank A/C                          80000

    (Being Securities Purchased)

E. Bank A/C       DR                         700

     TO Divident A/C                          700

(Being Divident recieved $1 per share)

F. Bank A/C       DR                      11760

     TO XIF Shares A/C                     9700

     TO profit on sale A/c                   2060

(Being Shares Sold for profit)

G. Bank A/c DR                              1972

     TO Interest on Flash Sec. A/c    1972

(Being interest Recieved)