Question

Zing Cell Phone Company entered into the following transactions involving current liabilities during 2020 and 2021.

	2020
Mar.	14	Purchased merchandise on credit from Ferris Inc. for $168,000. The terms were 1/10, n/30 (assume a perpetual inventory system).
Apr.	14	Zing paid $39,000 cash and replaced the $129,000 remaining balance of the account payable to Ferris Inc. with a 5%, 60-day note payable.
May	21	Borrowed $139,000 from Scotiabank by signing a 4.0%, 90-day note.
	?	Paid the note to Ferris Inc. at maturity.
	?	Paid the note to Scotiabank at maturity.
Dec.	15	Borrowed $114,000 and signed a 5.25%, 120-day note with National Bank.
Dec.	31	Recorded an adjusting entry for the accrual of interest on the note to National Bank.
	2021
	?	Paid the note to National Bank at maturity.

Required:
1. Determine the maturity dates of the three notes just described.

2. Present journal entries for each of the preceding dates. (Use 365 days an year. Do not round intermediate calculations and round the final answers to 2 decimal places.)

next question -

Johnson Inc.’s non-strategic investment portfolio at December 31, 2019, consisted of the following:

Debt and Equity Investments*	Cost				Fair Value
11,300 Xavier Corp. common shares	$	184,755				$	163,850
1,900 Young Inc. common shares		98,800					94,240
133,000 Zed Corp. common shares		43,900					39,500

*The fair value adjustments were recorded on December 31, 2019.

Johnson had no other debt and equity investments at December 31, 2019, other than those shown above. During 2020, Johnson engaged in the following transactions:

2020
Jan.	17		Sold 1,400 common shares of Young Inc. for $67,200. Johnson Inc. planned to hold these shares for less than one year.
Mar.	3		Purchased 6,300 common shares of Allen Corp. for $378,000. The shares represent a 30% ownership in Allen Corp.
June	7		Received dividends from Allen Corp. at the rate of $3.80 per share.
Aug.	14		Sold the remaining Young Inc. shares at $32.80.
Nov.	28		Purchased a 5% ownership in Davis Corp. by acquiring 11,300 common shares at a total of $100,570. Johnson Inc. will sell these shares in six to nine months.
Dec.	30		Sold 11,300 shares of Xavier Corporation for $180,800.
Dec.	31		Allen Corp. announced a net profit of $286,500 for the year.

Required:
Journalize the above transactions.

Analysis Component:
Assume the Allen Corp. shares were sold on January 16, 2021, for $377,000. Calculate the investment income or loss and select whether it is unrealized/realized?

Answer 1

Maturity dates of the three notes
1st Note
On April 14th, 5% 60 Day note payable to Ferris Inc
60 days from April 14th is 13th June.
Hence, the maturity date of the first payable note is 13th June
2nd Note
on May 21st, signed 90 day note
90 days from May 21st is Aug 19th
Hence, the maturity date of the second payable note is 19th August
3rd Note
On Dec 15th, signed 120 day note
120 days from Dec 15th is March 15th
Hence, the maturity date of the third note payable is March 15th

Journal entries in the books of Johnson Inc

Date	Particulars	Dr/Cr	Debit ($)	Credit ($)
17th Jan	Bank a/c	Dr	67,200
	Loss on Sale of Shares a/c	Dr	2,254
	To Young Inc Common shares a/c			69,454
	(Being 1400 shares sold and the subsequent loss recognised)
	Fair Value Per share	49.61
	(94250 / 1900)
	Sale Value of 1400 shares	69454
	(1400 X 49.61)
3rd Mar	Investments in Allen Corp a/c	Dr	378,000
	To Bank a/c			378,000
	(Being 6300 common shares purchased for $378,000)
7th June	Bank a/c	Dr	23,940
	To Invesments in Allen Corp			23,940
	(Being dividend received at the rate of 3.80 per share reduced from investments under equity method)
14th Aug	Bank a/c	Dr	16,400
	Loss on Sale of Shares a/c		8,405
	To Young Inc Common shares a/c			24,805
	(Being 500 shares sold and subsequent loss recognised)
28th Nov	Investment in Davis Corp a/c	Dr	180,800
	To Bank a/c			180,800
	(Being investments purchased in Davis Corp)
30th Dec	Bank a/c	Dr	180,800
	To Investment in Davis Corp a/c			180,800
	(Being investments sold in Davis Corp)
31st Dec	Investments in Allen Corp a/c	Dr	85,950
	To Income from Associates a/c			85,950
	(Being income from associate Allen Corp recognised under equity method)
	Share of Income = 30% of 286,500 = 85,590