Comprehensive Problem 4

Part 1:

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, Year 1, were as follows:

1. Journalize the selected transactions.

If no entry is required, select "No entry required" from the dropdown. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Issued 15,000 shares of $20 par common stock at $30, receiving cash.

Description Debit Credit

Cash

Common Stock

Paid-In Capital in Excess of Par-Common Stock

b. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.

Description Debit Credit

Cash

Preferred Stock

Paid-In Capital in Excess of Par-Preferred Stock

c. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.

Description Debit Credit

Cash

Bonds Payable

Premium on Bonds Payable

d. Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held and 20,000 shares of preferred stock were outstanding.

Description Debit Credit

Cash Dividends

Cash Dividends Payable

Common stock

Cash Dividends

Cash Dividends Payable

Preferred stock

e. Paid the cash dividends declared in (d).

Description Debit Credit

Cash Dividends Payable

Cash

f. Purchased 7,500 shares of Solstice Corp. at $40 per share plus a $150 brokerage commission. The investment is classified as an available-for-sale investment.

Description Debit Credit

Investments in Solstice Corp. Stock

Cash

g. Purchased 8,000 shares of treasury common stock at $33 per share.

Description Debit Credit

Treasury Stock

Cash

h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for $24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment.

Description Debit Credit

Investment in Pinkberry Co. Stock

Cash

i. Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued.

Description Debit Credit

Common Stock

Cash Dividends Payable

j. Paid the cash dividends to the preferred stockholders.

Description Debit Credit

Cash Dividends Payable

Cash Dividends Payable

k. Received $27,500 dividend from Pinkberry Co. investment in (h).

Description Debit Credit

Common Stock

Cash

l. Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of $375. The bonds are classified as a held-to-maturity long-term investment.

Description Debit Credit

Investments in Dream Inc. Bonds

No entry required

Interest Receivable

m. Sold, at $38 per share, 2,600 shares of treasury common stock purchased in (g).

Description Debit Credit

n. Received a dividend of $0.60 per share from the Solstice Corp. investment in (f).

Description Debit Credit

o. Sold 1,000 shares of Solstice Corp. at $45, including commission.

Description Debit Credit