a. On February 15, paid $140,000 cash to purchase American General\'s 90-day sho

Question

a. On February 15, paid $140,000 cash to purchase American General's 90-day short-term notes at par, which are dated February 15 and pay 7% interest (classified as held-to-maturity) b. On March 22, bought 900 shares of Fran Industries common stock at $38 cash per share plus a $180 brokerage fee (classified as long-term available-for-sale securities) c On May 15, received a check from American General in payment of the principal and 90 days' interest on the notes purchased in transaction a d. On July 30, paid $42,000 cash to purchase MP3 Electronics' 6% notes at par, dated July 30, 2017, and maturing on January 30, 2018 Skipped (classified as trading securities) e. On September 1, received a $O.68 per share cash dividend on the Fran Industries common stock purchased in transaction b f. On October 8, sold 450 shares of Fran Industries common stock for $44 cash per share, less a $160 brokerage fee g. On October 30, received a check from MP3 Electronics for three months' interest on the notes purchased in transaction d Prepare journal entries to record the above transactions involving both the short-term and long-term investments of Cancun Corp, all of which occurred during calendar-year 2017 Use the account Short-Term Investments for any transactions that you determine are short term. (Use 360 days in a year. Do not round your intermediate calculations) Journal entry worksheet On February 15, paid $140,000 cash to purchase American General's 90-day Prey 1 of 5 Next

Explanation / Answer

SOLUTION

Date Accounts titles and Explanation Debit ($) Credit ($) Feb. 15 Short-term investments - A.G. 140,000 Cash 140,000 March 22 Long-term investments - Fran 34,380 Cash [(900 * $38) + $180] 34,380 May 15 Cash 142,450 Short-term investments - A.G. 140,000 Interest revenue ($140,000*7%*90/360) 2,450 July 30 Short-term investments - Trading (MP3) 42,000 Cash 42,000 Sept.1 Cash (900 * $0.68) 612 Dividend revenue 612 Oct. 8 Cash [(450 * $44)- $160] 19,640 Long-term investments - Fran [(450 * $38)+ $90] 17,190 Gain on sale of long-term investments 2,450 Oct. 30 Cash ($42,000*6%*3/12) 630 Interest revenue 630

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