Prepare the journal entries to record the above three security purchases.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Metlock Corporation made the following cash purchases of securities during 2020, which is the first year in which Metlock invested in securities.
On May 20, 2020, Metlock sold 4,524 shares of Sanchez Company’s common stock at a market price of $ 35 per share less brokerage commissions, taxes, and fees of $ 4,466. The year-end fair values per share were Sanchez $ 30, Vicario $ 55, and WTA $ 28. In addition, the chief accountant of Metlock told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases.
| 1. | On January 15, purchased 11,600 shares of Sanchez Company’s common stock at $ 33.50 per share plus commission $ 2,304. | |
| 2. | On April 1, purchased 5,800 shares of Vicario Co.’s common stock at $ 52 per share plus commission $ 3,902. | |
| 3. | On September 10, purchased 8,120 shares of WTA Co.’s |
On May 20, 2020, Metlock sold 4,524 shares of Sanchez Company’s common stock at a market price of $ 35 per share less brokerage commissions, taxes, and fees of $ 4,466. The year-end fair values per share were Sanchez $ 30, Vicario $ 55, and WTA $ 28. In addition, the chief accountant of Metlock told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases.
(a)
Prepare the journal entries to record the above three security purchases. (Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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Account Titles and Explanation
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Debit
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(2)
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(3)
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