Chapter C, Problem 6E

Exercise C-6 Transactions in short-term and long-term investments Pl P2 P3

Prepare journal entries to record the following transactions invoking both the short-term and long-term investments of Cancun Corp., all of which occurred during calendar-year 2017 Use the account Short-Term Investments for any transactions that you determine are short term

1. On February 15, paid S160.000 cash to purchase American General s 90-day short-term notes at par, which are dated February 15 and pay 10% interest (classified as held-to- maturity)
2. On March 22, bought 700 shares of Fran Industries common stock at S51 cash per share plus a S150 brokerage fee (classified as long-term available-for-sale securities).
3. On May 15. received a check from American General in payment of the principal and 90 days' interest on the notes purchased in transaction a
4. On July 30. paid SI00.000 cash to purchase MP3 Electronics’ 8% notes at par, dated July 30, 2017. and maturing on January- 30, 2018 (classified as trading securities)
5. On September 1, received a $1.00 per share cash dividend on the Fran Industries common stock purchased in transaction b
6. On October 8, sold 350 shares of Fran Industries common stock for $64 cash per share, less a $125 brokerage fee
7. On October 30, received a check from MP3 Electronics for three months interest on the notes purchased in transaction d.