Question: Comprehensive Problem 4 Part 1: Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, Year 1, were as follows: 1.
Comprehensive Problem 4 Part 1:
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, Year 1, were as follows:
1. Journalize the selected transactions.
If no entry is required, select "No entry required" from the dropdown. For a compound transaction, if an amount box does not require an entry, leave it blank.
a. Issued 15,000 shares of $20 par common stock at $30, receiving cash.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 2 | fill in the blank 3 | |
| fill in the blank 5 | fill in the blank 6 | |
| fill in the blank 8 | fill in the blank 9 |
b. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 11 | fill in the blank 12 | |
| fill in the blank 14 | fill in the blank 15 | |
| fill in the blank 17 | fill in the blank 18 |
c. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 20 | fill in the blank 21 | |
| fill in the blank 23 | fill in the blank 24 | |
| fill in the blank 26 | fill in the blank 27 |
d. Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held and 20,000 shares of preferred stock were outstanding.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 29 | ||
| fill in the blank 31 | ||
| Common stock | ||
| fill in the blank 33 | ||
| fill in the blank 35 | ||
| Preferred stock |
e. Paid the cash dividends declared in (d).
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 37 | ||
| fill in the blank 39 |
f. Purchased 7,500 shares of Solstice Corp. at $40 per share plus a $150 brokerage commission. The investment is classified as an available-for-sale investment.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 41 | ||
| fill in the blank 43 |
g. Purchased 8,000 shares of treasury common stock at $33 per share.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 45 | ||
| fill in the blank 47 |
h. Purchased 40,000 shares of Pinkberry Co. stock directly from the founders for $24 per share. Pinkberry has 125,000 shares issued and outstanding. Equinox Products Inc. treated the investment as an equity method investment.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 49 | ||
| fill in the blank 51 |
i. Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 53 | ||
| fill in the blank 55 |
j. Paid the cash dividends to the preferred stockholders.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 57 | ||
| fill in the blank 59 |
k. Received $27,500 dividend from Pinkberry Co. investment in (h).
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 61 | ||
| fill in the blank 63 |
l. Purchased $90,000 of Dream Inc. 10-year, 5% bonds, directly from the issuing company, at their face amount plus accrued interest of $375. The bonds are classified as a held-to-maturity long-term investment.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 65 | fill in the blank 66 | |
| fill in the blank 68 | fill in the blank 69 | |
| fill in the blank 71 | fill in the blank 72 |
m. Sold, at $38 per share, 2,600 shares of treasury common stock purchased in (g).
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 74 | fill in the blank 75 | |
| fill in the blank 77 | fill in the blank 78 | |
| fill in the blank 80 | fill in the blank 81 |
n. Received a dividend of $0.60 per share from the Solstice Corp. investment in (f).
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 83 | ||
| fill in the blank 85 |
o. Sold 1,000 shares of Solstice Corp. at $45, including commission.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 87 | fill in the blank 88 | |
| fill in the blank 90 | fill in the blank 91 | |
| fill in the blank 93 | fill in the blank 94 |
p. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 96 | fill in the blank 97 | |
| fill in the blank 99 | fill in the blank 100 | |
| fill in the blank 102 | fill in the blank 103 |
q. Accrued interest for three months on the Dream Inc. bonds purchased in (l).
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 105 | ||
| fill in the blank 107 |
r. Pinkberry Co. recorded total earnings of $240,000. Equinox Products recorded equity earnings for its share of Pinkberry Co. net income.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 109 | ||
| fill in the blank 111 |
s. The fair value for Solstice Corp. stock was $39.02 per share on December 31, Year 1. The investment is adjusted to fair value, using a valuation allowance account. Assume that Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero.
| Description | Debit | Credit |
|---|---|---|
| fill in the blank 113 | ||
| fill in the blank 115 |
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