Exercise 17-11 Indigo Corporation made the following cash purchases of securities during 2017, which is the...

Exercise 17-11 Indigo Corporation made the following cash purchases of securities during 2017, which is the first year in which Indigo invested in securities. 1. On January 15, purchased 10,050 shares of Sanchez Company’s common stock at $40.20 per share plus commission $2,030. 2. On April 1, purchased 5,050 shares of Vicario Co.’s common stock at $62.40 per share plus commission $3,420. 3. On September 10, purchased 7,050 shares of WTA Co.’s preferred stock at $31.80 per share plus commission $4,960. On May 20, 2017, Indigo sold 4,050 shares of Sanchez Company’s common stock at a market price of $42 per share less brokerage commissions, taxes, and fees of $3,900. The year-end fair values per share were Sanchez $36, Vicario $66, and WTA $33.60. In addition, the chief accountant of Indigo told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases.

Prepare the journal entries to record the above three security purchases.

Solutions

Expert Solution

ANSWER

a	The total purchase price of these investment

	Sanchez	(10,050 *$40.20)+2,030	406,040
	Vicario	(5,050 *$62.40)+3,420	318,540
	WTA co	(7,050 *$31.80)+4,960	229,150

DATE	Description	Debit	credit
Jan-15	Equity Investments (Available for sale)	406,040
	Cash		406,040
	(404,010+ commission 2,030)

Apr-01	Equity Investments (Available for sale)	318,540
	Cash		318,540
	(315,120+ commission $3,420)

Sep-10	Equity Investments (Available for sale)	229,150
	Cash		229,150
	(224,190+ commission $4,960)

______________________________________________

If you have any query or any Explanation please ask me in the comment box, i am here to helps you.please give me positive rating.

*****************THANK YOU**************

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Exercise 17-11 Concord Corporation made the following cash purchases of securities during 2020, which is the...

Exercise 17-11 Concord Corporation made the following cash purchases of securities during 2020, which is the first year in which Concord invested in securities. 1. On January 15, purchased 11,000 shares of Sanchez Company’s common stock at $33.50 per share plus commission $2,184. 2. On April 1, purchased 5,500 shares of Vicario Co.’s common stock at $52 per share plus commission $3,701. 3. On September 10, purchased 7,700 shares of WTA Co.’s preferred stock at $26.50 per share plus commission...

Exercise 17-11 (Part Level Submission) Marin Corporation made the following cash purchases of securities during 2017,...

Exercise 17-11 (Part Level Submission) Marin Corporation made the following cash purchases of securities during 2017, which is the first year in which Marin invested in securities. 1. On January 15, purchased 10,140 shares of Sanchez Company’s common stock at $40.20 per share plus commission $2,120. 2. On April 1, purchased 5,140 shares of Vicario Co.’s common stock at $62.40 per share plus commission $3,510. 3. On September 10, purchased 7,140 shares of WTA Co.’s preferred stock at $31.80 per...

Metlock Corporation made the following cash purchases of securities during 2017, which is the first year...

Metlock Corporation made the following cash purchases of securities during 2017, which is the first year in which Metlock invested in securities. 1. On January 15, purchased 10,150 shares of Sanchez Company’s common stock at $46.90 per share plus commission $2,130. 2. On April 1, purchased 5,150 shares of Vicario Co.’s common stock at $72.80 per share plus commission $3,520. 3. On September 10, purchased 7,150 shares of WTA Co.’s preferred stock at $37.10 per share plus commission $5,060. On...

Metlock Corporation made the following cash purchases of securities during 2017, which is the first year...

Swifty Corporation made the following cash purchases of securities during 2017, which is the first year...

Swifty Corporation made the following cash purchases of securities during 2017, which is the first year in which Swifty invested in securities. 1. On January 15, purchased 10,050 shares of Sanchez Company’s common stock at $40.20 per share plus commission $2,030. 2. On April 1, purchased 5,050 shares of Vicario Co.’s common stock at $62.40 per share plus commission $3,420. 3. On September 10, purchased 7,050 shares of WTA Co.’s preferred stock at $31.80 per share plus commission $4,960. On...

Novak Corporation made the following purchases of investments during 2017, the first year in which Novak...

Novak Corporation made the following purchases of investments during 2017, the first year in which Novak invested in equity securities: 1. On January 15, purchased 7,470 shares of Nirmala Corp.’s common shares at $27.81 per share plus commission of $1,643. 2. On April 1, purchased 4,150 shares of Oxana Corp.’s common shares at $43 per share plus commission of $2,797. 3. On September 10, purchased 5,810 shares of WTA Corp.’s preferred shares at $22.00 per share plus commission of $2,415....

Exercise 4-11 The following are selected ledger accounts of Skysong Corporation at December 31, 2017. Cash...

Exercise 4-11 The following are selected ledger accounts of Skysong Corporation at December 31, 2017. Cash $189,090 Salaries and wages expense (sales) $288,090 Inventory 539,090 Salaries and wages expense (office) 350,090 Sales revenue 4,279,090 Purchase returns 19,090 Unearned sales revenue 121,090 Sales returns and allowances 83,090 Purchases 2,790,090 Freight-in 76,090 Sales discounts 38,090 Accounts receivable 146,590 Purchase discounts 31,090 Sales commissions 87,090 Selling expenses 73,090 Telephone and Internet expense (sales) 21,090 Accounting and legal services 37,090 Utilities expense (office) 36,090...

Blue Spruce Corporation made the following purchases of investments during 2020, the first year in which...

Blue Spruce Corporation made the following purchases of investments during 2020, the first year in which Blue Spruce invested in equity securities: 1. On January 15, purchased 10,350 shares of Nirmala Corp.’s common shares at $38.50 per share plus commission of $2,277. 2. On April 1, purchased 5,750 shares of Oxana Corp.’s common shares at $60 per share plus commission of $3,876. 3. On September 10, purchased 8,050 shares of WTA Corp.’s preferred shares at $30.50 per share plus commission...

Exercise 11-11 The following financial information is available for Pina Colada Corporation. (in millions) 2017 2016...

Exercise 11-11 The following financial information is available for Pina Colada Corporation. (in millions) 2017 2016 Average common stockholders’ equity $2,645 $2,725 Dividends declared for common stockholders 395 650 Dividends declared for preferred stockholders 35 35 Net income 680 750 Calculate the payout ratio and return on common stockholders’ equity ratio for 2017 and 2016. (Round answers to 1 decimal place, e.g. 12.5%) 2017 2016 Payout ratio enter payout ratio in percentages % enter payout ratio in percentages % Return...

Brief Exercise 14-7 On January 1, 2017, Indigo Corporation issued $620,000 of 9% bonds, due in...

Brief Exercise 14-7 On January 1, 2017, Indigo Corporation issued $620,000 of 9% bonds, due in 8 years. The bonds were issued for $656,123, and pay interest each July 1 and January 1. The effective-interest rate is 8%. Prepare the company’s journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Indigo uses the effective-interest method. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to...

Subjects