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On February 15, paid $170,000 cash to purchase American General's 90-day short-term notes at par, which...

  1. On February 15, paid $170,000 cash to purchase American General's 90-day short-term notes at par, which are dated February 15 and pay 8% interest (classified as held-to-maturity).
  2. On March 22, bought 900 shares of Fran Industries common stock at $24 cash per share plus a $180 brokerage fee (classified as long-term available-for-sale securities).
  3. On May 15, received a check from American General in payment of the principal and 90 days' interest on the notes purchased in transaction a.
  4. On July 30, paid $51,000 cash to purchase MP3 Electronics' 7% notes at par, dated July 30, 2017, and maturing on January 30, 2018 (classified as trading securities).
  5. On September 1, received a $0.36 per share cash dividend on the Fran Industries common stock purchased in transaction b.
  6. On October 8, sold 450 shares of Fran Industries common stock for $30 cash per share, less a $160 brokerage fee.
  7. On October 30, received a check from MP3 Electronics for three months’ interest on the notes purchased in transaction d.


Prepare journal entries to record the above transactions involving both the short-term and long-term investments of Cancun Corp., all of which occurred during calendar-year 2017. Use the account Short-Term Investments for any transactions that you determine are short term. (Use 360 days in a year. Do not round your intermediate calculations.)

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Date Account Debit Credit
Feb 15 Note Receivable-Short Term Investment $170,000.00
     Cash $170,000.00
(to record purchase of 8% note)
Mar 22 Investment in Frand Industries-AFS $ 21,780.00
     Cash (900*24)+180 $ 21,780.00
(to record investment in Frand industries)
May 15 Cash $173,400.00
     Note Receivable-Short Term Investment $170,000.00
     Interest Revenue (170000*8%*90/360) $    3,400.00
(to record receipt of principal and interest)
Jul 30 Note Receivable-Short Term Investment-Trading $ 51,000.00
     Cash $ 51,000.00
(to record purchase of 7% note)
Sep 1 Cash (900*0.36) $        324.00
     Dividend Revenue $        324.00
(to record receipt of dividend)
Oct 8 Cash $ 13,340.00
     Investment in Frand Industries-AFS ($21,780/900*450) $ 10,890.00
     Gain on sale of investment (Plug in) $    2,450.00
Oct 30 Cash ($51,000*7%*90/360) $        892.50
     Interest Revenue $        892.50

ekkarill92 answered 1 year ago
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