Problems

113. Bentz Corporation bought and sold several securities during 2006. Listed below is a summary of the transactions:

February 17	Purchased $100,000 of U.S. Treasury 6% bonds, paying 102 plus
	accrued interest of $1,000. The security is to be held for short-term profits.
April 10	Purchased 500 shares of Gauges Inc. common stock at $140 per
	share. This security will be held for an unspecified period of time.
August 8	Sold 100 shares of Gauges Inc. for $150 per share.
October 5	Sold half of the U.S. Treasury bonds for 103 plus accrued interest
	of $300.

Required:

Prepare the journal entries for the above transactions. Show calculations.

Answer:

Feb. 17	Investment in Treasury bonds	102,000
	Interest receivable	1,000
	Cash		103,000
Apr. 10	Investment in Gauges, Inc.	70,000
	Cash		70,000
Aug. 8	Cash	15,000
	Investment in Gauges, Inc.		14,000
	Gain on sale of investments		1,000
Oct. 5	Cash	51,800
	Investment in Treasury		51,000
	Gain on sale of investments		500
	Interest earned		300

Learning Objective: 2 Level of Learning: 3

114. Krogstad Corporation bought 1,000 shares of Cole Inc. for $90 per share plus a brokerage fee of $1,800. Three months later, the shares were sold for $110 per share. The brokerage fee on the sale was $2,200.

Required:

1. Prepare the appropriate journal entry to record the purchase of the stock.

2. Prepare the appropriate journal entry to record the sale of the stock.

Answer:

(1.)	Investments	91,800
	Cash		91,800
(2.)	Cash	107,800
	Investments		91,800
	Gain on sale of investments		16,000

Learning Objective: 2 Level of Learning: 3

115. On March 17, 2006, Union Corporation purchased 5,000 shares of AZQ common stock as a long-term investment at $40 per share. On December 31, 2006, and December 31, 2007, the market value of the AZQ stock is $42 and $43, respectively.