Question

questions 16.2-16.5

what is the op i nvestime curities he cash for strategic reasons? 4. What are the typical investments 5. Why would a company invest in securities that provide 6. What is the typical stock investment when investing cash for strategic rease Instructions Provide answers for Mr. Taliaferro. ining to debt investments. 00) for $40,000 cash. Interestis E16.2 (LO 1) Jenek Corporation had the following transactions pertaining to debt im 1. Purchased 40 Leeds Co. 95 bonds (each with a face value of $1.000) for $400 payable annually on January 1, 2020. 2. Accrued interest on Leeds Co. bonds on December 31, 2020. 3. Received interest on Leeds Co. bonds on January 1, 2021. 4. Sold 30 Leeds Co. bonds for $33,000 on January 1, 2021. Instructions Journalize the transactions. E163 (LOI) Flynn Company purchased 70 Rinehart Company 6%, 10-year, $1,000 bonds on Januar 2020. for $70,000. The bonds nav interest annually on January 1. On January 1, 2021, after mais interest, Flynn Company sold 40 of the bonds for $38,500. Instructions Prepare the journal entries to record the transactions described above. EIGA LO 21 Financial Statement Hulse Company had the following transactions pertaining stock investments Feb. 1 Purchased 600 shares of Wade common stock (2%) for $7.200 cash. July 1 Received cash dividends of S1 per share on Wade common stock. Sept.1 Sold 300 shares of Wade common stock for $4,300. Dec. 1 Received cash dividends of $1 per share on Wade common stock. Instructions a. Journalize the transactions b. Explain how dividend revenue and the pain loss) on sale should be reported in E16.5LO 2) Nosker Inc. had the following transactions pertaining to investments Jan. 1 Purchased 2.500 shares of Escalante Corporation common stock (39) July 1 Received a cash dividend of $3 per share. Dec. 1 Sold 500 shares of Escalante Corporation common stock for $32,000 Dec. 31 Received a cash dividend of $3 per share. Instructions Journalize the transactions in the income statement ents in common stock (5%) for $152,000 cand stock for $32,000 cash. E16.6 (LO 2) On February 1, Rinchart Company purchased 500 shares (2) y common stock for $32 per share. On March 20, Rinehart Company sol . Rinchart received a dividend of $1.00 per share on April bivens stock for $7.600. On July 28. Rinchart received a div a res (2% ownership) or 0. Rinchart for $32 per share. On any purchased 500 shares og ownership) of Give $7.600. On J of $1.00 per shinchart Company sold 100 shares of God ut received a dividend of $1.25 per ** for $7.00 end of sim 20. Rineh pril 25. On June 15. Rinchan ries to record the trans

Answer 1

Problem 16-2 :
Date	General journal	Debit	Credit
Jan 1,2020	Debt Investment (bonds )	$ 40,000
	Cash (40 bonds *$1000)		$ 40,000
	( to record purchase of Debt investment )
Dec 31,2020	Interest receivable (40 bonds*$1000*9%)	$ 3600
	Interest revenue		$ 3600
	(to record accrued interest on Leeds co. bonds )
Jan 1,2021	Cash	$ 3600
	Interest receivable (40 bonds*$1000*9%)		$ 3600
	( to record received interest on Leeds co.bonds)
Jan 1,2021	Cash	$ 33,000
	Debt Investment (bonds )($40000/40 *30 bonds)		$ 30,000
	Gain on sale on debt investment (33000-30,000)		$ 3000
	(to record sold 30 bonds of Leeds co.)

Problem 16-5 :
Date	General journal	Debit	Credit
Jan-01	Stock investment	$ 152,000
	Cash		$ 152,000
	(to record purchases of Escalante corporation common stock )
Jul-01	Cash	$ 7500
	Dividend income (2500 shares* $ 3 )		$ 7500
	( to record received cash dividend of $ 3 per share on 2500 shares)
Dec-31	Cash	$ 32,000
	stock Investment ($152,000/2500 *500 shares)		$ 30,400
	Gain on sale on stock investment (32000-30,400)		$ 1,600
	(to record sold 500 shares of $ 32,000)
Dec-31	Cash	$ 6,000
	Dividend income (2000 shares* $ 3 )		$ 6,000
	( to record received cash dividend of $ 3 per share on 2000 shares)