During the year ended December 31, 2014, Rakai Corporation, a public company, had the following transactions in
Question:
Feb. 1 Purchased 575 IBF common shares for $25,300.
Mar. 1 Purchased 1,500 Raimundo common shares for $48,000.
Apr. 1 Purchased $200,000 of CRT 3% bonds for $210,000. Interest is payable semi-annually on April 1 and October 1.
July 1 Received a cash dividend of $1.50 per share on the IBF common shares.
Aug. 1 Sold 250 IBF common shares at $48 per share.
Oct. 1 Received the semi-annual interest on the CRT bonds.
1 Sold the CRT bonds for $215,000.
Dec. 31 The fair values of the IBF and Raimundo common shares were $50 and $28 per share, respectively.
Instructions
(a) Record the transactions and any required year-end adjusting entries.
(b) Show the financial statement presentation of the trading investments and any related accounts in the financial statements for the year ended December 31, 2014.
Taking It Further
If Rakai Corporation anticipated that it would need the cash that was used to invest in the trading investments in the near future, should the company have invested in equity securities? What would you recommend to the company?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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a Feb 1 Trading Investments IBF Common Shares 25300 Cash 25300 Mar 1 Trading Investments Raimundo Co...View the full answer
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Related Book For 
Accounting Principles Part 3
ISBN: 978-1118306802
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Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
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