90.2K

Verified Solution

Link Copied!

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2014, were as follows:

1. Journalize the selected transactions.

If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. 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
SelectCashCommon StockNo entry requiredPaid-In Capital in Excess of Par-Common StockRetained EarningsItem 1
SelectCashCommon StockNo entry requiredRetained EarningsTreasury StockItem 4
SelectAccounts PayableCashNo entry requiredPaid-In Capital in Excess of Par-Common StockPreferred StockItem 7

b. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.

Description	Debit	Credit
SelectCashNo entry requiredPaid-In Capital in Excess of Par-Preferred StockPreferred StockRetained EarningsItem 10
SelectCommon StockNo entry requiredPreferred StockRetained EarningsTreasury StockItem 13
SelectCashCommon StockNo entry requiredPaid-In Capital in Excess of Par-Preferred StockRetained EarningsItem 16

c. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.

Description	Debit	Credit
SelectBonds PayableCashNo entry requiredPremium on Bonds PayableRetained EarningsItem 19
SelectBonds PayableCashCommon StockDiscount on Bonds PayableNo entry requiredItem 22
SelectCashDiscount on Bonds PayableNo entry requiredPaid-In Capital in Excess of Par-Common StockPremium on Bonds PayableItem 25

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
SelectCashCash Dividends PayableCash DividendsNo entry requiredTreasury StockItem 28
SelectCashCash Dividends PayableCash DividendsNo entry requiredTreasury StockItem 30
Common stock
SelectCashCash Dividends PayableCash DividendsNo entry requiredTreasury StockItem 32
SelectCashCash Dividends PayableCash DividendsNo entry requiredTreasury StockItem 34
Preferred stock

e. Paid the cash dividends declared in (d).

Description	Debit	Credit
SelectCashCash Dividends PayableCash DividendsNo entry requiredTreasury StockItem 36
SelectCashCash Dividends PayableCash DividendsNo entry requiredTreasury StockItem 38

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
SelectCashDiscount on Bonds PayableInvestments-Solstice Corp.No entry requiredTreasury StockItem 40
SelectCashCommon StockInvestments-Solstice Corp.No entry requiredPremium on Bonds PayableItem 42

g. Purchased 8,000 shares of treasury common stock at $33 per share.

Description	Debit	Credit
SelectCashCommon StockNo entry requiredPaid-in Capital from Sale of Treasury StockTreasury StockItem 44
SelectCashCommon StockNo entry requiredPaid-in Capital from Sale of Treasury StockTreasury StockItem 46

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
SelectCashCommon StockInvestment in Pinkberry Co. StockNo entry requiredStock DividendsItem 48
SelectCashCash Dividends PayableCommon StockNo entry requiredInvestment in Pinkberry Co. StockStock Dividends DistributableItem 50

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
SelectCommon StockCash DividendsNo entry requiredStock DividendsStock Dividends DistributableItem 52
SelectCashCash Dividends PayableCommon StockNo entry requiredTreasury StockItem 54

j. Paid the cash dividends to the preferred stockholders.

Description	Debit	Credit
SelectCashCash Dividends PayableCommon StockNo entry requiredRetained EarningsStock Dividends DistributableItem 56
SelectCashCash DividendsCash Dividends PayableCommon StockNo entry requiredStock DividendsItem 58

k. Received $27,500 dividend from Pinkberry Co. investment in (h).

Description	Debit	Credit
SelectCashCash DividendsCommon StockInvestment in Pinkberry Co. StockNo entry requiredItem 60
SelectCashDividend RevenueInvestment in Pinkberry Co. StockNo entry requiredTreasury StockItem 62

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 classifed as a held-to-maturity long-term investment.

Description	Debit	Credit
SelectBonds PayableCashCommon StockInvestments-Dream Inc. BondsNo entry requiredItem 64
SelectBonds PayableCashInterest ReceivableNo entry requiredPreferred StockItem 67
SelectBonds PayableCashInterest ReceivableInvestments-Dream Inc. BondsNo entry requiredItem 70

m. Sold, at $38 per share, 2,600 shares of treasury common stock purchased in (g).

Description	Debit	Credit
SelectCashCommon StockNo entry requiredPaid-In Capital from Sale of Treasury StockTreasury StockItem 73
SelectCashNo entry requiredRetained EarningsTreasury StockPaid-in Capital in Excess of Par-Common StockItem 76
SelectCashCommon StockDividends RevenueNo entry requiredPaid-In Capital from Sale of Treasury StockItem 79

n. Received a dividend of $0.60 per share from the Solstice Corp. investment in (f).

Description	Debit	Credit
SelectCashCash DividendsInvestments-Solstice Corp.Dividend RevenueNo entry requiredItem 82
SelectCashCash DividendsDividend RevenueInvestments-Solstice Corp.No entry requiredItem 84

o. Sold 1,000 shares of Solstice Corp. at $45, including commission.

Description	Debit	Credit
SelectCashCash DividendsGain on Sale of InvestmentInvestments-Solstice Corp.Loss on Sale of InvestmentNo entry requiredItem 86
SelectCashCash DividendsGain on Sale of InvestmentNo entry requiredTreasury StockItem 89
SelectCashInvestments-Solstice Corp.Loss on Sale of InvestmentNo entry requiredRetained EarningsItem 92

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
SelectBonds PayableCashDiscount on Bonds PayableInterest ExpenseNo entry requiredItem 95
SelectBonds PayableCashDiscount on Bonds PayableNo entry requiredPremium on Bonds PayableItem 98
SelectBonds PayableCashDiscount on Bonds PayableNo entry requiredPremium on Bonds PayableItem 101

q. Accrued interest for three months on the Dream Inc. bonds purchased in (l).

Description	Debit	Credit
SelectCashInterest ReceivableInterest RevenueInvestments-Dream Inc.No entry requiredItem 104
SelectCashInterest ReceivableInterest RevenueInvestments-Dream Inc.No entry requiredItem 106

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
SelectCashInvestment in Pinkberry Co. StockIncome from Pinkberry Co.No entry requiredTreasury StockItem 108
SelectCashCommon StockIncome from Pinkberry Co.Investment in Pinkberry Co. StockNo entry requiredItem 110

s. The fair value for Solstice Corp. stock was $39.02 per share on December 31, 2014. The investment is adjusted to fair value, using a valuation allowance account. Assume Valuation Allowance for Available-for-Sale Investments had a beginning balance of zero.

Description	Debit	Credit
SelectCashInvestments-Solstice Corp.No entry requiredUnrealized Gain (Loss) on Available-for-Sale InvestmentsValuation Allowance for Available-for-Sale InvestmentsItem 112
SelectCashInvestments-Solstice Corp.No entry requiredUnrealized Gain (Loss) on Available-for-Sale InvestmentsValuation Allowance for Available-for-Sale InvestmentsItem 114

Answer & Explanation Solved by verified expert

See Answer