JAG Manufacturing Company produces and sells one main prod
Question and Solution
JAG Manufacturing Company produces and sells one main product. There is significant seasonality in demand, and the unit price is quite high. As a result, during the heavy selling season, JAG generates cash that is idle for a few months. The company uses this cash to acquire investments. The following transactions relate to JAG’s investments during 2012: Mar. 15 Purchased 1,200 shares of Gates Corporation stock at $25 per share, plus brokerage fees of $815. This stock is classified as trading. Apr. 1 Purchased $45,000 of 10% bonds of Micro Company. This investment is classified as available-for-sale. June 3 Received a cash dividend of $1.50 per share on the Gates stock. Oct. 1 Received a semiannual interest payment of $2,250 on the Micro bonds. 10 Sold 480 shares of the Gates stock at $32 per share less a $500 brokerage fee. Dec. 31 Recorded $1,125 of interest earned on the Micro bonds for the period October 1, 2012, through December 31, 2012. 31 The market price of the Gates stock was $21 per share; the market price of the Micro bonds (excluding consideration of the interest receivable on the bonds) was $43,000. Required: Prepare journal entries to record these transactions.