ve Problem 4 transactions completed by Equinox Products Inc, during the fiscal y

Question

ve Problem 4 transactions completed by Equinox Products Inc, during the fiscal year ended ecember 31, 2016, were as follows: Issued 15,000 s hares of $20 par common stock at 830, receiving cash Issued 4,000 shares bf sso par preferred Soh stock at $100, receiving cash. 1,00 1% 200 Issued $500,000 of 10-year, 5% bonds at 104, with interest payable o ,066 Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share or preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding . e, Paid the cash dividends declared in (d). . Purchased 7,500 shares of Solstice Corp. at $40 per share, plus a $150 brokerage com- mission. The investment is classified as an available-for-sale investment. Purchased 8,000 shares of treasury common stock at $33 per share. share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. h. Purchased 40,000 shares of Pinkberry Co, stock directly from the founders for $24 per treated the investment as an equity method investment. i. Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date Continued) of record, 20,000 shares of preferred stock had been issued.

Explanation / Answer

Date Accounts Title Dr Cr a Cash (15000*30) $450,000 Common Stock (15000*20) 300000 Paid In capital in excess of par-Common stock $150,000 b Cash (400*100) $400,000 Preferred Stock (4000*80) 320000 Paid In capital in excess of par-Preferred stock $80,000 c Cash (500000/100*104) 520000 Bonds Payable $500,000 Premium on Bonds Payable $20,000 d Cash Dividend 70000 Common Stock Dividend payable (100000*.5) $50,000 Preferred stock Dividend payable (20000*1) 20000 e Common Stock Dividend payable (100000*.5) $50,000 Preferred stock Dividend payable (20000*1) 20000 Cash 70000 f Available for sale Securities 300150 Cash (7500*40)+150 300150 g Treasury stock 264000 Cash (8000*33) 264000 h Investment in Pinkberry (40000*24) 960000 Cash 960000 i Cash Dividend 20000 Preferred stock Dividend payable (20000*1) 20000 j Preferred stock Dividend payable (20000*1) 20000 cash 20000 h Cash 27500 Investment in Pinkberry 27500 i Investments-Held To Maturity $90,000 Interest receivable 375 Cash $90,375 j Cash (2600*38) 98800 Paid in capital in excess-Treasury stock 13000 Treasury stosk (2600*33) 85800 k Cash 4500 Dividend Revenue (7500*.6) 4500 l Cash $45,000 Gain on sale of Investment $4,980 Available for sale Securities (300150/7500*1000) 40020 m Interest expenses ( 11500 Premium on Bonds Payable (20000/20) 1000 Cash (500000*2.5%) 12500 n Interest Receivable 1125 Interest revenue (90000*5%*3/12) 1125 o Investment in Pinkberry 96000 Equity Income (240000*40%) 96000 p Unrealized Loss on securities 6500 Valuation Allowance for AFS 6500 (300150/7500*6500)-(6500*39.02)

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