Sarah Company Case Study

Team A Week 5 Problems
PE-2, page 862
In January 2012, the administration of Sarah Company determined that it has enough money to buy transient investments in debt and stock securities. In the course of the year, these are the transactions that happened.
Feb. 1
Purchased 1,200 shares of NJF common stock for $50,600 plus brokerage fees of $1,000.
Mar. 1 Purchased 500 shares of SEK common stock for $18,000 plus brokerage fees of $500.
Apr. 1
Purchased 70 $1,000, 8% CRT bonds for $70,000 plus $1,200 brokerage fees. Interest is payable semiannually on April 1 and October 1.
July 1
Received a cash dividend of $0.80 per share on the NJF common stock. Aug. 1 Sold 200 shares of NJF common stock at $42 per share
…show more content…
Stock Investments 51600 Cash 51600
(To record purchase of 1200 shares of NJF common stock)

Mar1
Stock Investments 18500
Cash
18500
(To record purchase of 500 shares of SEK common stock)
Apr1
Debt Investments 71200
Cash
71200
(To record purchase of 70 CRT
Bonds)
Jul1
Cash (1200 x 0.80) 960
Dividend Revenue 960
(to record receipt of a cash dividend
NJF)
Aug 1
Cash
8050
Loss on Sale of Investments
…show more content…
Sept 1
Cash (500 x 2.00) 1000
Dividend Revenue 1000
(to record receipt of a cash dividend)
Oct1
Cash 2800
Interest Revenue 2800
(To record receipt of interest on CRT bonds) Oct 1
Cash
75700
Debt investment 71200
Gain on sale of investments 4500
(To record sale of CRT bonds)
Dec31
Unrealized Loss - Income 7500
Market
Adjustment
Trading
7500
(to record unrealized loss on trading securities) CASH
Debit......Credit
960 51600
8050

Related Documents