M&JB Investment Corp. (with a 12/31 year-end) began operations on 1/1/X1 by issuing 10,000 shares of $5 par value common stock to 5 shareholders. Each shareholder paid $40,000 for their 2,000 shares. M&JB uses straight-line amortization for bond investments, all of which paid annual interest when due on 12/31.Ignore income taxes. Round each transaction to the nearest dollar.

The following transactions took place:

20X1:

Jan. 1 Record the initial investment by the owners described above.

Bought the following Available-for-Sale (AFS) securities:

200 shares of ABC Co. common stock for $ 24 per share.

100 shares of DEF Co. common stock for $ 16 per share.

300 shares of GHI Co. common stock for $20 per share.

Jan. 1 Bought the following Held-to-Maturity securities:

30 bonds of PQR Co. for $938.00 per $1,000 bond.

100 bonds of STU Co. for $1,068.45 per $1,000 bond.

Feb. 2 Bought the following Trading Securities:

300 shares of JKL Co. common stock for $19 per share.

150 shares of MNO common stock for $18 per share.

Aug 3 Sold 200 shares of JKL Co. stock for $26.38 per share.

Bought 100 shares of VWX Co. common stock for $32 per share, classified as AFS Securities.

Sold 300 shares of GHI Co. stock for $21.51 per share.

Dec 15 Received cash dividends from common stock investments for 20X1

Dec 31 Investment expenses of $1,151 were paid in cash for the year

Received interest on bond investments, and made necessary amortizations

Made all necessary fair market value adjustments

Made all necessary closing entries

20X2:

Jan. 1 Issued 100 shares of $100 par value, 8%, cumulative Preferred Stock for $16,845. The Preferred Stock is convertible into common stock, 5 shares of common for each share of preferred.

Jan. 2 Bought 300 shares of RJB Co. common stock for $50 per share. Significant influence was achieved. Assume FVO was not elected.

Apr 2 Sold 100 shares of JKL Co. stock for $31.51 per share

Bought 150 more shares of MNO Co. common stock for $15 per share

Jul 1 Bought 300 shares of XYZ Co. common stock for $60.151 per share; classified as a trading security.

Sold 100 shares of DEF Co. stock for $18.38 per share

Nov1 Declared cash dividends to our shareholders of $1.38 per common share and $8 per preferred share.

Nov 15 Paid dividends declared on Nov. 1

Dec 15 Received cash dividends from common stock investments for 20X2

Dec 31 Investment expenses of $6,845 were paid in cash for the year

Received interest on bond investments, and made necessary amortizations

Made all necessary fair market value adjustments

Made all necessary closing entries

Required:

1.Prepare general journal entries to record the above transactions. Use Excel.

2.Prepare comparative financial statements for the two years. Include an Income Statement (including BEPS and DEPS - show your computations), a Statement of Shareholder Equity, and a Balance Sheet. Use Excel or other spreadsheet software.

Schedule A Common Stocks

Company Name Shares O/S Dividends per Share FMV per share at:

20X1 20X2 20X1 20X2

ABC Co. 2,000 3.38 3.38 24.38 30.38

DEF Co. 3,000 4.38 4.38 14.38 16.38

JKL Co. 9,000 1.38 1.38 24.38 -

MNO Co. 8,000 2.38 2.38 16.38 15.38

VWX Co. 4,000 5.38 5.38 29.38 31.38

RJB Co. 1,000 21.51 21.51 - 90.38

XYZ Co. 7,000 6.38 6.38 - 59.38

Company Name Reported Earning for:

20X1 20X2

RJB Co. 40,000 46,845

Schedule B Bonds

All investment bonds pay interest annually on December 31

Company Name Stated Interest Rate Maturity Date

PQR Co. 7.00 % 12/31/20X8

STU Co. 8.25 % 12/31/20X9