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Bonds and Share investments

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Question;Q-1 AB Company purchased as a;long-term investment $500,000 of BC Corporation 10-year, 9% bonds. Present;entries to record the following selected transactions:A) Purchased bonds for $475,000.Sold half the bonds at 98 plus accrued;interest of $4,000. The broker deducted $200 for brokerage fees and taxes;remitting the balance. The bonds were carried at $489,000 at the time of the;sale.Q-2 Present entries to record the;following selected transactions of MT Co.A) Purchased 600 shares of the 100,000;shares outstanding $10 par common shares of Dank Corporation for $5,100.B) Purchased 3,500 shares of the 10,000;shares no par common shares of RM Co. for $45,700. The investment was accounted;for by the equity method.C)Received a cash dividend of $1 per share on the Dank;Corporation stock acquired in (A)(D) Received a cash dividend of $2 per;share on the RM Co. stock acquired in (B).(E) Sold 100 shares of the Dank Corporation;shares acquired in (A) for $2,100.(F) Dank;Corporation reported net income of $30,000 and RM Company's reported net income;was $50,000. Q3-On May 1, 2011, Stan Company purchased $50,000 of HR Company's 12%;bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stan received;its first semiannual interest. On February 1, 2012, Stan sold $40,000 of the;bonds at 103 plus accrued interest.The journal entry Stan will record on June;30, 2011, will include:A) a credit to Interest Receivable for;$1,000.B) a credit to Interest Revenue for $2,000.C) a debit to Cash for $2,000.;D) a debit to Cash for $3,000.="msonormal">

 

Paper#38252 | Written in 18-Jul-2015

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