At the beginning of January 2011 Belford Buckle Company held 500 shares of Wirl common stock in its investment portfolio of available for sale securities These shares had cost 9 000 and had a market value of 9 500 on January 1 2011 During 2011 Belford had several other transactions relating to its investments in available for sale securities as follows On January 7 Belford purchased 400 shares of Nirt common stock for 6 000 and on July 1 Belford purchased 10 10 000 bonds of Fess Company for 10 000 The bonds pay interest on June 30 and December 31 On August 5 Belford sold the 500 shares of Wirl common stock for 9 900 On December 15 Belford received cash dividends of 1 per share on the Nirt common stock and on December 31 it received the interest on the Fess bonds At the end of December the Nirt shares had a market value of 5 700 and the Fess Bonds had a market value of 10 200 Required 1 Record the 2011 investment transactions and events for Belford Keep track of the balance in the Investments account 2 Show how Belford would report the results of the investment transactions and events on its 2011 income statement and on its December 31 2011 balance sheet assuming it expects to sell the investments in 2012 1 Assets Cash 1 1 1 07 7 01 8 05 12 15 12 31 12 31 Endin g Bal 2 Investmen ts in Availablefor Sale Securities Liabiliti es Stockholders Equity Unrealize d Change In Market Value Of Investmen ts Gai n On Sal e Los s On Sal e Dividen Intere d st Rev Rev 2011 Income Statement 2011 Balance Sheet On January 1 2011 Foley Aircraft Company purchased on the stock market 25 of Pet Helicopter Inc s 80 000 shares of common stock paying 5 25 per share On that date the book value of Pet s stockholders equity was 420 000 On December 31 2011 Foley reported a balance in its investment account for Pet of 120 000 Pet did not pay dividend in 2011 Required 1 How much did Foley pay for its investment in Pet 2 How much did Foley report as its 2011 income in regard to its investment in Pet 3 What was the total net income of Pet during 2011 On January 1 2011 Hoffman Company purchased 12 year zero coupon bonds issued by Martinez Company The bonds have a face value of 400 000 and were purchased to yield 8 Hoffman expects to hold these bonds until maturity so it uses the amortized cost method to account for its investment Required 1 Compute the purchase price of the bonds 2 Compute the interest revenue for 2011 and 2012 3 What is the book value of the bonds on December 31 2012 On January 10 2011 Ryland Carpet Corporation is incorporated and is authorized to issue 20 000 shares of 7 par value common stock On January 12 2011 it issues 1 000 shares at 12 per share and on July 5 2011 it issues another 800 shares at 15 per share Required 1 Record the two issuances of common stock for Ryland 2 Prepare the contributed capital section of Ryland s December 31 2011 balance sheet 1 Asset s Cash 1 1 2 7 0 5 2 2011 Balance Sheet Liabilitie s Stockholders Equity Contributed Capital Common Additional Stock Paid in Capital Antley Company issued 200 shares of 10 par value common stock in exchange for five acres of land Required Record the acquisition of the land for each of the following independent situations a The common stock is currently selling on the stock market for 80 per share b The land is appraised at 15 000 but the stock is not actively traded in the stock market a Asset s Liabilitie s Stockholders Equity Contributed Capital Common Additional Paid In Stock Capital Land b Asset s Land Liabilitie s Stockholders Equity Contributed Capital Common Additional Paid In Stock Capital On January 1 Amitroy Company had 20 000 shares of 5 par value common stock outstanding The shares were originally issued at 12 per share During the year the following stock transactions occurred March 4 The company reacquired 2 000 shares of its common stock at a cost of 12 per share April 5 The company sold 1 000 shares of the treasury stock for 14 per share July 9 The company sold the remaining 1 000 shares of the treasury stock for 11 per share Required 1 Record all the preceding transactions in one set of accounts for Amitroy 2 What is the final net effect on the accounts after these transactions are recorded Why 1 Asset s Liabilitie s Cash 3 0 4 4 0 5 7 0 9 Stockholders Equity Contributed Capital Additional Paid in Treasury Stock Capital 2 The records of the Lundgren Chemical Corporation show the following pretax items on December 31 2011 Cost of goods sold Extraordinary loss from flood General and administrative expenses Interest revenue Interest expense Loss on sale of discontinued component Q 65 00 0 2 250 12 000 700 300 250 Income from operations of discontinued component Q Selling expenses Sales 800 23 000 129 40 0 Additional Information a There were 3 000 shares of common stock outstanding on January 1 2011 Only July 1 2011 the corporation issued 6 000 common shares b The corporation paid dividends for the current year on 500 shares of 7 100 par preferred stock outstanding Dividends of 6 000 were paid on common stock c The corporation is subject to a 40 income tax Required Prepare the income Statement of Lundgren Chemicals Corporation for 2011 use empty page During 2011 Herley Transport Corporation entered into the following long term debt and capital stock transactions a Issued 5 000 shares of common stock for 18 per share b Issued 1 000 shares of preferred stock for 110 per share c Reacquired 1 000 shares of common stock for 19 per share d Issued long term bonds for 100 000 e Paid interest of 10 000 on long term bonds f Paid dividends of 16 000 on preferred stock g Paid dividends of 34 000 on common stock Required Show how Herley would report the preceding transactions on its 2011 cash flow statement assuming it uses the direct method for reporting cash flows from operating activities During the month of July Sands Insurance Company entered into the following transactions Date Transaction Jul 1 Nancy Sands deposited a 30 000 personal check in the company s checking account y 10 Purchased land and an office building at a cost of 2 000 and 21 000 respectively Paying 8 000 down and signing a 15 000 note due at the end of the year 25 Purchased office supplies costing 800 on credit Required 1 Prepare journal entries to record the preceding transactions 2 List the source documents normally used in recording each of these transactions 1 Account Date Titles Acct No Deb it 2 Both Plumbing Company entered into the following transactions