Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

During the current year, Big Band Corporation has the following transactions related to its short-term investments. 1. Purchased $40,000, 8%, 20 year bonds of Lennon

image text in transcribedimage text in transcribed

During the current year, Big Band Corporation has the following transactions related to its short-term investments. 1. Purchased $40,000, 8%, 20 year bonds of Lennon Corporation, paying $36,000 cash. 2. Purchased 600 shares of Harrison common stock for $23 per stare plus $1.200 broker's fees. 3. Sold 200 shares of Harrison common stock for $28 per share less S200 broker's fees. 4. Received a semi-annual interest payment from Lennon Corporation. 5. Received a $3 per share dividend on the Harrison common stock. 6. At the end of the year, the market value of the Harrison common stock was $29 per share and the market value of the Lennon bond was $37,500 REQUIRED: A. Prepare the journal entries necessary for the current year to account for the investment transactions of Big Band Corporation. Note you may want to post and balance the accounts AFTER transaction before making the entry for transaction 6. GENERAL JOURNAL Date Account Titles DR CR B. Post your entries to the T-accounts below: Cash Marketable Securities Adjustment to Market Unrealized Loss/Gain on Valuation (EQUITY) Dividend Revenue Realized Loss/Gain on Sale Interest Revenue Unrealized Loss/Gain on Valuation (DEBT) C. Indiciate the accounts and their balances that would appear on Big Band's financial statements at the end of the current year assuming that the investments had been purchased as trading securities. Income Statement: Balance Sheet: D. Indicate the accounts and their balances that would appear on Big Band's financial statements at the end of the year assuming instead that the investments had been purchased as available for sale securities Income Statement: Balance Sheet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Accounting Uk Gaap Volume 2

Authors: Alan Sangster, Frank Wood

1st Edition

0273718800, 9780273718802

More Books

Students also viewed these Accounting questions

Question

Calculate the cost per hire for each recruitment source.

Answered: 1 week ago

Question

What might be some advantages of using mobile recruiting?

Answered: 1 week ago

Question

What external methods of recruitment are available?

Answered: 1 week ago