hw8 - ORIE 350 Homework#8 Due by 4:30 PM Late homework is...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ORIE 350 Homework #8 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. 1. First Insurance purchased shares of Sun Microsystems on December 28, 1999 for $400,000. This investment was considered to be a short-term investment in trading securities. The value of the shares was $435,000 on Dec. 31, 1999. The shares were sold on January 3, 2000 for $480,000. a. Prepare the journal entry for Dec. 28, 1999. Dec. 28, 1999 Investment, Trading Securities 400,000 Cash 400,000 b. Prepare the journal entry for Dec. 31, 1999, First Insurance’s FYE. Dec. 28, 1999 Allowance, Trading Securities 35,000 Unrealized Gain, T.S. 35,000 c. Prepare the journal entry for Jan. 3, 2000. Jan. 3, 2000 Cash 480,000 Investment, Trading Sec. 400,000 Allowance, Trading Sec. 35,000 Gain on Sale, Trading Sec. 45,000 Darned good investment! 2. During 2004, the following selected transactions occurred at the Hammertime Corporation. a. Feb. 1 Purchased 20,000 shares of the company’s stock on the open market for $22 cash per share, plus a $2,200 brokerage fee. b. July 15 Sold 10,000 of those shares for $24 per share, net of fees. c. Sept. 1 Sold 5,000 shares for $19.85 per share, net of fees. d. Dec. 15 Sold 5,000 shares for $18.15 per share, net of fees. a. Show the journal entries. b. What impact does the purchase of treasury stock have on dividends paid? c. What impact does the sale of treasury stock for an amount higher than the purchase price have on the income statement?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Feb. 1, 2004 Treasury stock (SE) 442,200 Cash (A) 442,200 Note that the brokerage fee is included. Thus, the historical cost of the treasury stock is actually $22.11 per share. July 15, 2004 Cash (A) 240,000 Treasury stock (SE) 221,100 Paid in Capital, Treasury Stock (SE) 18,900 We credit the treasury stock at $22.11 per share. The excess is put into the Paid in Capital, Treasury Stock account. Sept. 1, 2004
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/03/2008 for the course ORIE 350 taught by Professor Callister during the Fall '08 term at Cornell.

Page1 / 6

hw8 - ORIE 350 Homework#8 Due by 4:30 PM Late homework is...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online