Question

	Ditcher, Quick & Hyde had the following short term investment transactions:
1-Jan	Purchased 500 shares of Linton Corp. stock for $20 per share. Brokerage fee on transaction is $20.
1-Jan	Purchased 100, 5%, $1,000 Mass Green Bonds. These are 10 year bonds that pay interest
	on 6-30 and 12-31.   The bonds were purchased for $100,000 cash. Brokerage fee is $50.
30-Jun	Received cash dividends of $2.00 per share on Linton Corp. stock.
30-Jun	Received interest revenue on the bonds.
1-Aug	Sold 100 shares of the Linton Corp. stock for $30 per share. Brokerage fee is $50.
	Prepare the necessary journal entries.

1-Jan	Sofa So Good purchased 40% of the outstanding stock of Baker Corp. paying			250,000
	Sofa So Good has significant influence over Baker Corp.
31-Dec	As of December 31, Baker Corp. had declared and paid cash dividends of			30,000
	Baker Corp's reported net income for the year was			100,000
	Prepare the journal entries for Sofa So Good that are needed on January 1 and December 31.

Answer 1

Journal Entries:                                                                                          (Amount in $)

                                                                                                Debit                         Credit

Jan 1: Investment in Shares                                          10,020

                        To cash                                                                                              10,020

            (Being 500 Shares purchased and brokerage paid)

Jan 1: Investment in Bonds                                            100,050

                        To cash                                                                                              100,050

            (Being 100 Bonds purchased and brokerage paid)

June 30: Cash (500 shares * $ 2 per share)               1,000

                        To Dividend Income                                                                      1,000

            (Being Dividend income received on investment)

June 30: Cash (100,000*5%*6/12)                            2,500

                        To Interest Revenue                                                                      2,500

            (Being Interest Revenue received)

Aug 1: Cash [(100 shares*$30 per share) - $50]     2,950

                        To Investment in Shares                                                               2,950

            (Being 100 shares sold and brokerage paid on sale)

Journal entries:

Jan 1: Investment                                                              250,000

                        To cash                                                                                              250,000

            (Being Shares acquired and has significant influence)

Dec 31: Cash (30,000*40%)                                          12,000

                        To Investment                                                                                 12,000

            (Being dividend income received and investment decreases)

Dec 31: Investment (100,000* 40%)                          40,000

                        To Equity Income                                                                           40,000

            (Being Equity income recorded)