On 1/1/2015, Starburst Company issued 10-year bonds with a face value of $500,000 at 102. The binterest payable semi-annually on January 1 and July 1. Starburst uses the straight-line method of a
On 1/1/2015, Starburst Company issued 10-year bonds with a face value of $500,000 at 102. The binterest payable semi-annually on January 1 and July 1. Starburst uses the straight-line method of a(a) Prepare the journal entry to record the issuance of the bonds.(b) Prepare the journal entry to record payment of interest on July 1, 2015.(c) Prepare the adjus²ng entry to record the accrual of interest on December 31, 2015.(d) Prepare the balance sheet presenta²on for the bond on 12/31/2015.(e) Prepare the balance sheet presenta²on for the bond on 12/31/2016.Solutons:DateAccountDebitStarburst CorporationBalance Sheet (Partial)12/31/2015Starburst CorporationBalance Sheet (Partial)12/31/2016
| Black, Inc. management occasionally invests idle cash in stocks that are not intended to be held long term. | ||||
| Management treats these investments as trading securities. | ||||
| 1/5/2015 | Purchased 2,500 shares of Eversilver Corporation common stock, which constitutes less than 10% of the outstanding | |||
| shares of the company for $54.00 per share cash plus a total broker commission of $200. | ||||
| 6/15/2015 | Received a cash dividend of $1.50 per share. | |||
| 12/15/2015 | Received a cash dividend of $1.60 per share. | |||
| 12/31/2015 | The market value of the stock is $60 per share as of year end, and a commission of $200 would apply to sell the shares. | |||
| 1/22/2016 | Sold 1,000 shares of Eversilver Corporation common stock for $62 per share minus $120 commission. | |||
| Instructions: Prepare Journal entries for the above transactions. | ||||
| Solutions: | ||||
| Date | Account | Debit | Credit | |
| White Corporation acquired 50,000 shares of the outstanding common stock of Gold Company for $12.00 per share. | |||
| The following events occurred during the year. | |||
| 6/15/2015 | Gold declared and paid $0.50 per share cash dividend. | ||
| 12/10/2015 | Gold declared and paid $0.55 per share cash dividend. | ||
| 12/31/2015 | Gold reported net income for the year of $325,000. The market price of Gold common stock was $25 per share on the last day of the year. | ||
| Instructions: | |||
| (a) Prepare the journal entries for White in 2015, assuming that the purchase of Gold stock constituted less than 10% of Gold’s outstanding shares. | |||
| White treats this investment as available-for-sale securities. | |||
| (b) Prepare the journal entries for White in 2015, assuming that the purchase of Gold stock constituted 30% of Gold’s outstanding shares. | |||
| Solutions: | |||
| Date | Account | Debit | Credit |
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