E17-11 (Equity Securities Entries) Arantxa Corporation made the following cash purchases of securities during 2014, which...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
E17-11 (Equity Securities Entries) Arantxa Corporation made the following cash purchases of securities during 2014, which is the first year in which Arantxa invested in securities. 1. On January 15, purchased 10,000 shares of Sanchez Company's common stock at $33.50 per share plus commission $1,980. 2. On April 1, purchased 5,000 shares of Vicario Co.'s common stock at $52.00 per share plus commis- sion $3,370. 3. On September 10, purchased 7,000 shares of WTA Co.'s preferred stock at $26.50 per share plus commission $4,910. On May 20, 2014, Arantxa sold 4,000 shares of Sanchez Company's common stock at a market price of $35 per share less brokerage commissions, taxes, and fees of $3,850. The year-end fair values per share were Sanchez $30, Vicario $55, and WTA $28. In addition, the chief accountant of Arantxa told you that Arantxa Corporation plans to hold these securities for the long term but may sell them in order to earn profits from appreciation in prices. Instructions (a) Prepare the journal entries to record the above three security purchases. (b) Prepare the journal entry for the security sale on May 20. (c) Compute the unrealized gains or losses and prepare the adjusting entries for Arantxa on December 31, 2014. E17-11 (Equity Securities Entries) Arantxa Corporation made the following cash purchases of securities during 2014, which is the first year in which Arantxa invested in securities. 1. On January 15, purchased 10,000 shares of Sanchez Company's common stock at $33.50 per share plus commission $1,980. 2. On April 1, purchased 5,000 shares of Vicario Co.'s common stock at $52.00 per share plus commis- sion $3,370. 3. On September 10, purchased 7,000 shares of WTA Co.'s preferred stock at $26.50 per share plus commission $4,910. On May 20, 2014, Arantxa sold 4,000 shares of Sanchez Company's common stock at a market price of $35 per share less brokerage commissions, taxes, and fees of $3,850. The year-end fair values per share were Sanchez $30, Vicario $55, and WTA $28. In addition, the chief accountant of Arantxa told you that Arantxa Corporation plans to hold these securities for the long term but may sell them in order to earn profits from appreciation in prices. Instructions (a) Prepare the journal entries to record the above three security purchases. (b) Prepare the journal entry for the security sale on May 20. (c) Compute the unrealized gains or losses and prepare the adjusting entries for Arantxa on December 31, 2014.
Expert Answer:
Answer rating: 100% (QA)
Date Accounts Titles and Explanation Debit Credit 2014 1Jan InvestmentSanchez Company 336980 Cash ... View the full answer
Related Book For
Financial Management Principles and Applications
ISBN: 978-0133423822
12th edition
Authors: Sheridan Titman, Arthur Keown, John Martin
Posted Date:
Students also viewed these accounting questions
-
Salte Corporation is issuing new common stock at a market price of $27. Dividends last year were $1.45 and are expected to grow at an annual rate of 6 percent forever. Flotation costs will be 6...
-
Salte Corporation is issuing new common stock at a market price of $27. Dividends last year were $1.45 and are expected to grow at an annual rate of 6 percent, forever. What is Saltes cost of common...
-
Falon Corporation is issuing new common stock at a market price of $28. Dividends last year were $1.30 and are expected to grow at an annual rate of 7 percent, forever. What is Falons cost of common...
-
The rotating beacon of a parked police car is 12 m from a straight wall. (a) Sketch the graph of the length L of the light beam, where L = 12 sec t, for 0 t 2.0 s. (b) Which part(s) of the graph...
-
In this chapter, weve studied how policy responses affect economic variables in an open economy. Consider each of the problems in policy design and implementation discussed in this chapter. Compare...
-
Give some examples of unique human linguistic abilities.
-
Tomlinsons Lumens, Inc. (TLI) is a large manufacturer of lighting fixtures and parts. TLAs Accounting department receives files tomlinsonprices and tomlinsonunits that summarize the price and units...
-
Real Cash Flows you are planning to save for retirement over the next 30 years. To save for retirement, you will invest $700 a month in a stock account in real dollars and $300 a month in a bond...
-
A light source is located 1.55m below the surface of a swimming pool and 0.545m from one edge of the pool. At what angle does the light reaching the edge of the pool leave the water? You have a piece...
-
It is now January 2018. The year 2017 finished well. The finalized year-end financial statements for 2017 are provided in the excel file associated with this assignment. Randolf and Tenisa at Comfy...
-
Your fellow student was playing Angry Birds on a mobile phone in the lecture theatre when they suddenly stopped, looked up at you and said, Deferred tax liabilities and assets should be measured...
-
Determine the consequences of the ethical breach on the people and the case study organization. Conduct an evaluation of the breach considering the ethical standards that we study in the unit. You...
-
How do enzymes achieve catalytic efficiency and specificity through precise substrate binding and transition state stabilization, and what are the structural and dynamic features that underpin these...
-
Which two credits (available to Delaware residents only) are calculated based on the amount of credit allowed on the taxpayer's federal return? a. Earned Income Credit, and Research and Development...
-
The first step in classifying information is to determine: 1. What level of classification is appropriate for the information? 2. If the information in question is official government material. 3....
-
2.2 How will the advancements in Artificial Intelligence shape the future of work and daily life, and what factors should be considered to ensure these developments have a positive impact? (15) 2.1...
-
Develop a Fortran program that simulates the motion of a pendulum using numerical methods. Create a Fortran subroutine that solves a quadratic equation given its coefficients.
-
The packaging division of a company having considered several alternative package designs for the company's new product has finally brought down their choices to two designs of which only one has to...
-
Last year Triangular Resources earned $5 million in net operating income and had an operating profit margin of 20 percent. If the firms total asset turnover ratio was 1.5, what was the firms...
-
a. Compute the expected rate of return for Intel common stock, which has a 1.2 beta. The risk-free rate is 3.5 percent and the market portfolio (composed of New York Stock Exchange stocks) has an...
-
Solarpower Systems expects to earn $20 per share this year and intends to pay out $8 in dividends to shareholders and retain $12 to invest in new projects with an expected return on equity of 20...
-
What are the pros and cons of basing a custody decision on the stated preference of a child?
-
What impact does witnessing spousal abuse have on children? For what other reasons do courts take intra-spousal violence into account when deciding custody?
-
Post-Palmore, can race and culture ever be taken into account when deciding custody? Explain.
Study smarter with the SolutionInn App