During certain periods, Yang Company invests its excess cash until it is needed. During 2010 and 2011,

Question:

During certain periods, Yang Company invests its excess cash until it is needed. During 2010 and 2011, Yang engaged in these transactions:

2010

Jan. 16 Invested $146,000 in 120-day U.S. Treasury bills that had a maturity value of $150,000.

Apr. 15 Purchased 10,000 shares of King Tools common stock at $40 per share and 5,000 shares of Mellon Gas common stock at $30 per share as trading securities.

May 16 Received maturity value of U.S. Treasury bills in cash.

June 2 Received dividends of $2.00 per share from King Tools and $1.50 per share from Mellon Gas.

June 30 Made year-end adjusting entry for trading securities. Market price per share for King Tools is $32; for Mellon Gas, it is $35.

Nov. 14 Sold all the shares of King Tools for $42 per share.

2011

Feb. 15 Purchased 9,000 shares of MKD Communications for $50 per share.

Apr. 1 Invested $195,500 in 120-day U.S. Treasury bills that had a maturity value of $200,000.

June 1 Received dividends of $2.20 per share from Mellon Gas.

30 Made year-end adjusting entry for held-to-maturity securities.

30 Made year-end adjusting entry for trading securities. Market price of Mellon Gas shares is $33 per share and of MKD Communications shares is $60 per share.

Required

1. Prepare entries in journal form to record the preceding transactions, assuming that Yang Company’s fiscal year ends on June 30.

2. Show the balance sheet presentation of short-term investments on June 30, 2011.

3. Explain the following statement: “Held-to-maturity and trading securities are opposites in terms of investment strategy and thus require opposite accounting treatments.”

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...