Hollyhock, Inc., a calendar year corporation, had the attached transactions in debt and equity securities during 20X4.
Question:
Hollyhock, Inc., a calendar year corporation, had the attached transactions in debt and equity securities during 20X4.
REQUIRED:
(1) Prepare all general journal entries required for Hollyhock, Inc.'s investments for 20X4. Be sure to show all appropriate computations.
(2) Indicate the amounts and description of those amounts relating to Hollyhock's investments that would be shown on the income statement and balance sheet for the year ending December 31, 20X4. Be sure to show the proper classification and location of those items on the statements.
HOLLYHOCK, INC.
INVESTMENT SECURITIES TRANSACTIONS
FOR YEAR ENDING DECEMBER 31, 20X4
Jan. I Purchased various securities for cash and classified them as follows.
Trading Securities
10.000 common shares of Flower Co. ($48 per share plus 2% broker commission)
5,000 warrants on the common shares of Flower Co. ($12 each, no charges)
10,000 convertible preferred shares of Flower Co., $5 par value, 10% noncumulative and nonparticipating ($87 per share, $100 broker commission)
Available For Sale Securities
5,000 common shares of Stem, Inc. ($8 per share, no charges)
100 convertible debentures of Stem. Inc., 8% stated rate, each bond has a $1,000 face value, mature on 12/31/X8, and pay interest on 6/30 and 12/31 (purchased at 99, no charges)
600.000 common shares of Petal. Inc. ($1 per share. $300 broker commission)
200,000 common shares of Pistil, Inc. ($3 per share, $250 broker commission)
Held To Maturity Securities
200 debentures of Stamen, Inc., 10% stated rate, each bond has a $1,000 face value, mature on 10/31/Y3, pay interest annually on 10/31, with a yield to maturity of 15% (purchased at 74.9 plus accrued interest. no charges)
Mar. I Received the semiannual dividend on the preferred shares of Flower Co. Apr. I Sold 5,000 common shares of Flower Co. at $68 per share less a $150 broker commission.
June 30 Received the semiannual interest on the Stem. Inc. bonds and recorded straight line amortization of the discount or premium for the semiannual period.
Aug. 15 Changed intention regarding the 100.000 common shares of Pistil, Inc. and reclassified them as Trading Securities when the shares were trading at $2 each.
Sept. 1 Received the semiannual dividend on the Flower Co. preferred shares.
Governmental and Nonprofit Accounting
ISBN: 978-0132751261
10th edition
Authors: Robert Freeman, Craig Shoulders, Gregory Allison, Robert Smi