Please check my entry and please put the amounts and solutions if it is correct.
The Instruction is :
To journal entries for the issue of shares, issue of the bonds and the dividends, plus all the investments made during the year. Also the adjustments at year end to accrue interest on the bond and to record change to any applicable investments.
During 2021, the company has performed well, so the board of directors decided to pay dividends. On November 30, 2021, the company declared cash dividends of $50,000, which will be paid out on December 15, 2021. Use the cash dividends method and close cash dividends at the end of the year. During the year, Holister Electric made the following investments: a) On January 1, Holister purchased a strategic investment of 12,000 shares in Gregor Inc. for $11 per share. This represents 40% of Gregor Inc. common shares. On December 31, Gregor Inc. declares and pays a $60,000 dividend and reports a net income of $400,000. Holister will use the equity method to record this investment. b) On April 17, they purchased a $20,000, 90 day T-bill at 4%% for $19,804. The T-bill matures on July 16. c) On July 1, they purchased a $50,000, 5 year bond paying 6% when the market rate was 8%. Interest is paid every 6 months on December 31 and June 30. Holister paid $45,945 to purchase the bond and plans to hold onto the bond until it matures. d) On November 23, the company purchased 2,000 shares of Daenerys Inc. at $19 per share for the purpose of trading. The shares are less than 4% of the total shares of Daenerys Inc. and are a non- strategic investment. By December 31, the price per share had gone up to $22 per share. Prepare the journal entries for the issue of shares, issue of the bonds and the dividends, plus all the investments made during the year. Also prepare adjustments at year end to accrue interest on the bond and to record change to any applicable investments.31-Dec Cash investment in associate-Louis Inc. To record dividends received on equity investment in Louis inc 31-Dec Short term investment- Duke Inc common shares Gain on fair value adjustment to Duke inc ommon shares To record fair value adjustment to Duke in common shares 31-Dec Interest expense discount on bonds interest payable Accrued interest expense and amortized discount at year end 31-Dec Cash Long-term investment-Bonds Interest Revenue To record interest received and amortized discount on Bonds 31-Dec Retained Earnings Cash dividends- Common Cash dividends- Preferred To close cash dividends to retained earningsAzul took the proceeds from dissolving the partnership and purchased a corporation selling electrical parts used for large production companies. He employs several people, but is looking to expand his operations further. In addition to expanding the sales of electrical parts, he also wants to start selling heating, ventilation and air conditioning (HVAC) parts and machinery through a separate division of the company called 'HVAC Parts & Machinery.' Currently, Razul owns all the shares in the corporation. To raise the needed cash, he decides to offer common and preferred shares for sale to investors starting in 2021. Below is the balance sheet at the end of 2020. Holister Electric Inc. Balance Sheet As at December 31, 2020 Assets Liabilities Cash $25,000 Accounts Payable $12,200 Accounts Receivable 13,500 Unearned Revenue 5,200 Prepaid Insurance 3,600 Bank Loan 26,000 Inventory 72,000 Total Liabilities 43,400 Property, Plant & Equipment 210,000 Shareholders' Equity Accumulated Depreciation -25,000 Common Shares - issued 90,000 Retained Earnings 165,700 Total Shareholder's Equity 255,700 Total Assets $299,100 Liabilities & Owner's Equity $299,100 Azul has authorized common shares and preferred shares. The preferred shares will be cumulative and pay $ dividends. Razul wants to keep control of his business, so he will keep his common shares and will sit on the board of directors. Azul has located a few private investors that wish to purchase shares in the new corporation. Some want common shares, while other are interested in preferred shares. On January 1, 2021, Razul issues 30,000 common shares for $75,000 cash and issues 3,000 preferred shares for $12,000 cash. On March 1, 2021, Holister Electric Inc. issued and sold $150,000, 6 year bonds with an interest rate of 7%. The market rate at the time of issue was 8%%. Any premium or discount on the bond is amortized using the effective interest rate method. Interest will be paid annually on February 28. Use a 4 decimal factor for the bond calculation.Date Account Title and Explanation 1-Jan investment in associate-Louis Inc cash To record purchase of 1000 shares in Louis INC. 20-Jan Cash common Shares Prefered shares Issued $75000 common shares and $28000 prefered shares 1-Mar Cash discount on Bonds Bonds payable To record bond issued at discount 17-Apr Short term investment Treasury bill cash To record purchase of 90 day t-bill 1-Jul Long-term investment-Bonds Cash To record purchase of bonds 16-Jul Cash Interest revenue Short term investment Treasury bill To record retirment of treasury bill at maturity 23-Nov Short term investment- Duke Inc common shares To record purchase of 150 shares 30-Nov Cash dividends-Common Cash dividends-Preffered Dividends payable To record cash dividends payable 15-Dec Dividends payable Cast To record dividends payable 31-Dec investment in associate-Louis Inc. revenue from investment in associtate To record 25% profit om equity inestment in louis inc
