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 the current year.
a. On February 15, paid $160,000 cash to purchase GMI’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 Inc. common stock at $51 cash per share. Cancun’s stock investment results in it having an insignificant influence over Fran.
c. On May 15, received a check from GMI in payment of the principal and 90 days’ interest on the notes purchased in part a.
d. On July 30, paid $100,000 cash to purchase MP Inc.’s 8%, six-month notes at par, dated July 30 (classified as trading securities).
e. On September 1, received a $1 per share cash dividend on the Fran Inc. common stock purchased in part b.
f. On October 8, sold 30 shares of Fran Inc. common stock for $54 cash per share.
g. On October 30, received a check from MP Inc. for three months’ interest on the notes purchased in part d.