Investment in Securities-Recording and Analysis
Response to the following problem:
The following data pertain to the securities of Linford Company during 2009, the company's first year of operations:
a. Purchased 400 shares of Corporation A stock at $40 per share plus a commission of $200. This security is classified as trading.
b. Purchased $6,000 of Corporation B bonds. These bonds are classified as trading.
c. Received a cash dividend of $0.50 per share on the Corporation A stock.
d. Sold 100 shares of Corporation A stock for $46 per share.
e. Received interest of $240 on the Corporation B bonds.
f. Purchased 50 shares of Corporation C stock for $3,500. Classified the stock as availablefor-sale.
g. Received interest of $240 on the Corporation B bonds.
h. Sold 150 shares of Corporation A stock for $28 per share.
i. Received a cash dividend of $1.40 per share on the Corporation C stock.
j. Interest receivable at year-end on the Corporation B bonds amounts to $60.
Required:
Prepare journal entries to record the preceding transactions. Post the entries to T-accounts, and determine the amount of each of the following for the year:
1. Dividend revenue.
2. Bond interest revenue.
3. Net gain or loss from selling securities.