Problem 12-2A (Part Level Submission) In January 2017, the management of Kinzie
ID: 2453526 • Letter: P
Question
Problem 12-2A (Part Level Submission)
In January 2017, the management of Kinzie Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred.
Feb. 1 Purchased 550 shares of Muninger common stock for $29,700.
Mar. 1 Purchased 870 shares of Tatman common stock for $23,490.
Apr. 1 Purchased 64 $1,150, 9% Yoakem bonds for $73,600. Interest is payable semiannually on April 1 and October 1.
July 1 Received a cash dividend of $0.62 per share on the Muninger common stock.
Aug. 1 Sold 183 shares of Muninger common stock at $65 per share.
Sept. 1 Received a $1 per share cash dividend on the Tatman common stock.
Oct. 1 Received the semiannual interest on the Yoakem bonds.
Oct. 1 Sold the Yoakem bonds for $72,600.
At December 31, the fair value of the Muninger common stock was $55 per share. The fair value of the Tatman common stock was $26 per share.
(a) Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.) (Round answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. If the ending balance is 0 select Dec. 31 Bal. for the date and enter 0 for the normal balance for that account.)
Date Account Titles and Explanation Debit Credit
Feb. 1 (2 entries)
Mar. 1 (2 entries)
Apr. 1 (2 entries)
July 1 (2 entries)
Aug. 1 (3 entries)
Sept. 1 (2 entries)
Oct. 1 (2 entries) (To record interest)
Oct. 1 (3 entries) (To record sale)
Explanation / Answer
FEB1 (i) Bank A/c $29,700
To Share Application A/c $29,700
(Being Applicaton money paid for share of Muninger)
(ii) Share Application A/c $29,700
To Share Capital A/c $29,700
(Being Applicaton transfer to capita)
MAR1 (i) Bank A/c $23,490
To Share Application A/c $23,490
(Being Applicaton money paid for share of Tatman)
(ii) Share Application A/c $23,490
To Share Capital A/c $23,490
(Being Applicaton transfer to capita)
APR1 9% Yoakem bonds $73,600
To Bank A/c $73,600
Interest Receivable A/c $6624
To Interet $6624
JUL1 Cash A/c $341
To Dividend Income $341
Dividened Incom A/c $341
To Profit and loss A/c $341
Aug1 Bank A/c $11875
To Investment In Muninger A/c $9882
To Profit on sale A/c $1993
Profit On Sale A/c $1993
To Profit and Loss A/c $1993
SEP1 Cash A/c $870
To Dividend Income $870
Dividened Incom A/c $870
To Profit and loss A/c $870
OCT1 Bank A/c $3312
To Interest Receivable $3312
OCT 1 Bank A/c $72,600
Loss On sale $1000
To 9% Yoakem bonds A/c $73,600
Profit and LossA/c $1000
To Loss On Sale $1000