E16-1 Mr. Taliaferro is studying for an accounting questions about investments. test and has developed the fo estions about investn etudying for an accounting test and has developed the 1. What are three 2. Why would a 3. Wh conm ons why companies purchase investments in debt or stock corporation have excess cash that it does not need for operations? 4. What are estment when investing cash for short periods of time? cash to generate earnings? 4. What are the typical investments when investing 5. Wh y would a company invest in securities that provide no current cash flows? o. What is the typical stock investment when investing cash for strategic reasons? ts, rporation had the following transactions pertaining to debt investments 1. Purch ased 50996, $ 1,000 Leeds Co. bonds for $50,000 cash. Interest is payable annually on January 1, 2017. 2. Accrued interest on Leeds Co. bonds on December 31, 2017. 3. Received interest on Leeds Co. bonds on January 1, 2018. 4. Sold 30 Leeds Co. bonds for $33,000 on January 1 Instructions Journalize the transactions E163 Flynn Company purchased 70 Rinehart Company 6%, 10-year, $1,000 bonds on January 1, 2017, for $70,000. The bonds pay interest annually on January 1. On January 1, 2018, after receipt of interest, Flynn Company sold 40 of the bonds for $38,500. Instructions Prepare the journal entries to record the transactions described above. E16-4 Hulse Company had the following transactions pertaining to stock investments. Feb. 1 Purchased 600 shares of wade common stock (2%) for $7,200 cash. July 1 Received cash dividends of $1 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 gain (loss) on sale should be reported in the income statement