American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2013, gains from selling trading securities totaled $5 million, losses were $12 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account during December 2013, and the first week of 2014. The company's fiscal year ends on December 31. No trading securities were held by American on December 1, 2013. 2013 Dec. 12 Purchased FF&G Corporation bonds for $22 million. 13 Purchased 2 million Ferry Intercommunications common shares for $28 million. 1 5 Sold the FF&G Corporation bonds for $22.1 million. 22 Purchased U.S. Treasury bills for $68 million and Treasury bonds for $75 million. 23 Sold half the Ferry Intercommunications common shares for $10 million. 26 Sold the U.S. Treasury bills for $72 million. 27 Sold the Treasury bonds for $73 million. 28 Received cash dividends of $200,000 from the Ferry Intercommunications common shares. 31 Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Ferry Intercommunications stock was $10 per share. 2014 Jan. 2 Sold the remaining Ferry Intercommunications common shares for $10.5 million. 5 Purchased Warehouse Designs Corporation bonds for $44 million. Required: Prepare the appropriate journal entry for each transaction or event during 2013, including the closing entry to income summary for the year. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5)
American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2013, gains from selling trading securities totaled $5 million, losses were $12 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American's trading account during December 2013, and the first week of 2014. The company's fiscal year ends on December 31. No trading securities were held by American on December 1, 2013. 2013 Dec. 12 Purchased FF&G Corporation bonds for $22 million. 13 Purchased 2 million Ferry Intercommunications common shares for $28 million. 1 5 Sold the FF&G Corporation bonds for $22.1 million. 22 Purchased U.S. Treasury bills for $68 million and Treasury bonds for $75 million. 23 Sold half the Ferry Intercommunications common shares for $10 million. 26 Sold the U.S. Treasury bills for $72 million. 27 Sold the Treasury bonds for $73 million. 28 Received cash dividends of $200,000 from the Ferry Intercommunications common shares. 31 Recorded any necessary adjusting entry(s) and closing entries relating to the investments. The market price of the Ferry Intercommunications stock was $10 per share. 2014 Jan. 2 Sold the remaining Ferry Intercommunications common shares for $10.5 million. 5 Purchased Warehouse Designs Corporation bonds for $44 million. Required: Prepare the appropriate journal entry for each transaction or event during 2013, including the closing entry to income summary for the year. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:American Surety and Fidelity buys and sells securities expecting to earn profits on
short-term differences in price. For the first 11 months of 2013, gains from selling
trading securities totaled $5 million, losses were $12 million, and the company had
earned $5 million in investment revenue.
The following selected transactions relate to American's trading account during
December 2013, and the first week of 2014.
The company's fiscal year ends on December 31. No trading securities were held
by American on December 1, 2013.
2013 Dec.
12 Purchased FF&G Corporation bonds for $22 million.
13 Purchased 2 million Ferry Intercommunications common shares for $28 million.
1
5 Sold the FF&G Corporation bonds for $22.1 million.
22 Purchased U.S. Treasury bills for $68 million and Treasury bonds for $75 million.
23 Sold half the Ferry Intercommunications common shares for $10 million.
26 Sold the U.S. Treasury bills for $72 million.
27 Sold the Treasury bonds for $73 million.
28 Received cash dividends of $200,000 from the Ferry Intercommunications
common shares.
31 Recorded any necessary adjusting entry(s) and closing entries relating to the
investments. The market price of the Ferry Intercommunications stock was $10 per
share.
2014 Jan.
2 Sold the remaining Ferry Intercommunications common shares for $10.5 million.
5 Purchased Warehouse Designs Corporation bonds for $44 million.
Required:
Prepare the appropriate journal entry for each transaction or event during 2013,
including the closing entry to income summary for the year. (If no entry is required
for a particular event, select "No journal entry required" in the first account field.
Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be
entered as 5.5)
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