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TWA made the following investments during 2012 : 1/15/2012 – Purchased 1,000 shs of IBM stock...

TWA made the following investments during 2012 :

1/15/2012 – Purchased 1,000 shs of IBM stock for $ 2,410

2/01/2012 – Purchased 50,000 IBM bonds , 10%, for 52,100

5/15/2012 – Sold 600 shs of IBM stock for $ 3/ share

8/1/2012 – Received semi-annual interest on the IBM Bonds

8/1/2012 – Sold 30,000 IBM Bonds for 30,800.

12/31/2012 – Accrued interest on the remaining IBM Bonds;

to journal entries and to record the various transactions

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Expert Solution

Journal Entries in the books of TWA for the year 2012

Date Particulars Amount Dr($) Amount Cr($)
15/01/2012

Investment in IBM shares a/c Dr

To Bank a/c

(Being purchase of 1000 stock of IBM for $2.41/share)

2410

2410
01/02/2012

10% IBM bonds a/c Dr

To Bank a/c

(Being purchase of 50000 10% bonds of IBM for $52100)

52100

52100
15/05/2012

Bank a/c Dr

To Investment in IBM Shares

To Profit on sale of shares

(Being 600 IBM shares sold at $3/share)

1800

1446

354
01/08/2012

Bank a/c Dr

To Interest on IBM bonds

(Interest on IBM bonds received semi annually)

2250

2250
01/08/2012

Bank a/c Dr

Loss on IBM Bonds Dr

To 10% IBM Bonds

(Being 30000 IBM bonds sold for $30800 which were originally purchasesd for 31260 )(52100/50000*30000)

30800

460

31260
31/12/2012

10% IBM Bonds a/c Dr

To Interest on IBM Bonds

(Being Interest accrued on 20000 IBM bonds for 5 months accounted)

833

833

ekkarill92 answered 2 years ago
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