Due October 24, 2006 by 4:30 PM
Late homework is never accepted.
Please staple your homework and write your section number on the homework.
Keep a photocopy of your homework if you desire, as this homework will not be returned
before Prelim II.
First Insurance purchased shares of Sun Microsystems on December 28, 1999 for
This investment was considered to be a short-term investment in trading
The value of the shares was $435,000 on Dec. 31, 1999.
The shares were sold
on January 3, 2000 for $480,000.
Prepare the journal entry for Dec. 28, 1999.
Dec. 28, 1999
Investment, Trading Securities
Prepare the journal entry for Dec. 31, 1999, First Insurance’s FYE.
Dec. 28, 1999
Allowance, Trading Securities
Unrealized Gain, T.S.
Prepare the journal entry for Jan. 3, 2000.
Jan. 3, 2000
Investment, Trading Sec.
Allowance, Trading Sec.
Gain on Sale, Trading Sec.
Darned good investment!
During 2004, the following selected transactions occurred at the Hammertime
Purchased 20,000 shares of the company’s stock on the open market for
$22 cash per share, plus a $2,200 brokerage fee.
Sold 10,000 of those shares for $24 per share, net of fees.
Sold 5,000 shares for $19.85 per share, net of fees.
Sold 5,000 shares for $18.15 per share, net of fees.
Show the journal entries.
What impact does the purchase of treasury stock have on dividends paid?
What impact does the sale of treasury stock for an amount higher than the purchase
price have on the income statement?