Question

During 2019, Harper Corporation for the first time decided to acquire some equity and debt securities as a means of putting some of its idle cash to work. The equity securities are classified as trading securities and the debt securities are treated as available for sale. The information for 2017 follow:

Jan 1 Purchased $30,000 face value of Bradford Company, 8% bonds for $29,100 The bonds pay interest June 30 and June 30 and December 31. The bonds mature December 31, 2027.

Jan 1 Purchased 100 shares of Gordon Company common stock for $2,800.

June 30 Collected the interest on Bradford Company bonds.

July 1 Purchased $40,000 face value of Morris Company 10% bonds for $40,400. The bonds pay interest June 30 and December 31. The bonds mature December 31, 2022.

July 2 Received dividends of $0.75 per share on the Gordon Company common stock.

Aug 9 Purchased 300 shares of Porter Company common stock for $36 per share.

Aug 24 Sold 100 shares of the Gordon Company common stock for $30 per share.

Sep 7 Purchased 500 Shares of Union Company common stock for $22 per share.

Dec 31 Harper collected the interest on the Bradford Company and Morris Company Bonds. Sold on this date Morris bonds for $40,800. The fair value of Bradford bonds on this date was $30,800. The Porter Company common stock had a quoted market price of $36.60 per share and the Union Company common stock had a quoted market $21 per share.

Instructions: Prepare the journal entries to record the preceding information. Harper uses the straightline method to amortize any bond investments purchased at a premium / discount. Show supporting computations for your journal entries.

Answer 1