Entries for StockInvestments, Dividends, and Sale of Stock

Yerbury Corp. manufactures construction equipment.

1.Journalize the entries to record the following selected equity investment transactions completed by Yerbury during a recent year:

Feb. 2Purchased for cash 5,300 shares of Wong Inc. stock for $20 per share plus a $110 brokerage commission.Mar. 6Received dividends of $0.30 per share on Wong Inc. stock.June 7Purchased 2,000 shares of Wong Inc. stock for $26 per share plus a $120 brokerage commission.July 26Sold 6,000 shares of Wong Inc. stock for $35 per share less a $100 brokerage commission. Yerbury assumes that the first investments purchased are the first investments sold.Sept. 25Received dividends of $0.40 per share on Wong Inc. stock.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Feb. 2

Mar. 6

June 7

July 26

Sept. 25

2.BondDiscount, Entries for Bonds Payable Transactions

On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

For all journal entries with a compound transaction, if an amount box does not require an entry, leave it blank.

3.Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. For a compound transaction, if an amount box does not require an entry, leave it blank.

Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account.

The straight-line method of amortization provides equal amounts of amortization over the life of the bond.

4.Journalize the entries to record the following:

a.The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (For a compound transaction, if an amount box does not require an entry, leave it blank. Round to the nearest dollar.)

b.The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (For a compound transaction, if an amount box does not require an entry, leave it blank. Round to the nearest dollar.)

5.Determine the total interest expense for Year 1. Round to the nearest dollar.

$

6.Compute the price of $42,309,236 received for the bonds by using theTable 1,Table 2,Table 3andTable 4. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount$

Present value of the semiannual interest payments$

Price received for the bonds$