Question

Prepare journal entries to record the following transactions involving both the short-term and long-term investments of Cancun Corp., all of which occurred during calendar year 2013. Use the account Short-term Investments for any transactions that you determine are short term.
a. On February 15, paid $ 160,000 cash to purchase American General’s 90- day short-term notes at par, which are dated February 15 and pay 10% interest (classified as held-to- maturity).
b. On March 22, bought 700 shares of Fran Industries common stock at $ 51 cash per share plus a $ 150 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 $ 100,000 cash to purchase MP3 Electronics’ 8% notes at par, dated July 30, 2013, and maturing on January 30, 2014 (classified as trading securities).
e. On September 1, received a $ 1.00 per share cash dividend on the Fran Industries common stock purchased in transaction b.
f. On October 8, sold 350 shares of Fran Industries common stock for $ 64 cash per share, less a $ 125 brokerage fee.
g. On October 30, received a check from MP3 Electronics for three months’ interest on the notes purchased in transaction d.



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  • CreatedNovember 26, 2013
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