Problems
43. On September 1, Investors, Inc. purchases 1,000 shares (insignificant influence) of $1 par value common stock of Hamilton International at $15 per share. On October 15, the investment is sold for $18 per share. Record the purchase and sale of the investment in Hamilton International.
44. California Designs is diversifying its investment portfolio by making a small investment (less than 5%) in the common stock of Oregon Outfitters. California Designs engages in the following transactions relating to its investment:
January 1Purchases 1,000 shares of Oregon Outfitters common stock for $20 per share. The investment is properly classified as an available-for-sale security.
July 12Sells 300 shares of Oregon Outfitters stock for $18 per share.
September 30Receives a cash dividend of $1 per share.
December 31Adjusts the investment to fair value. The fair value of Oregon Outfitters stock is now $15 per share.
Record each of these transactions, including the December 31 adjustment to fair value.
Calculate the balance of the Investments account on December 31.
45. Athletic Accessories has the following transactions related to investments in common stock.
May 1Purchases 5,000 shares (insignificant influence) of Endurance Wear common stock for $22 per share. The investment is properly classified as an available-for-sale security.
June 30Receives a cash dividend of $1 per share.
October 18Sells 2,000 shares of Endurance Wear common stock at $25 per share.
December 31Adjusts the investments to fair value. The fair value of Endurance Wear common stock is now $30 per share.
1. Record each of these transactions, including an entry on December 31 to adjust the investment to fair value.
2. Calculate the balance of the investment account on December 31.
46. Sandy Sensations purchases twenty, $1,000, 7%, 10-year bonds issued by Pizza Pier for $20,000 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 7%. Interest is received semiannually on June 30 and December 31.
1. Record the investment in bonds.
2. Record receipt of the first interest payment on June 30, 2015.
47. Sandy Sensations purchases twenty, $1,000, 7%, 10-year bonds issued by Pizza Pier for $18,641 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 8%. Interest is received semiannually on June 30 and December 31.
1. Record the investment in bonds.
2. Record receipt of the first interest payment on June 30, 2015.
48. Sandy Sensations purchases twenty, $1,000, 7%, 10-year bonds issued by Pizza Pier for $21,488 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 6%. Interest is received semi-annually on June 30 and December 31.
1. Record the investment in bonds.
2. Record receipt of the first interest payment on June 30, 2015.