Accounting for the Purchase and Sale of Securities
During January 2008, Aragorn Inc. purchased the following securities:
|
Security |
Classification |
No of Shares |
Total Cost |
|
Gimli Corporation stock |
Trading |
500 |
$ 9,000 |
|
Legolas International Inc. stock |
Available for sale |
1,000 |
22,000 |
|
Glorfindel Enterprises stock |
Available for sale |
2,500 |
42,500 |
|
Mirkwood Co bonds |
Held to maturity |
— |
24,000 |
|
US Treasury bonds |
Trading |
— |
11,000 |
During 2008, Aragorn received interest from Mirkwood and the U.S. Treasury totaling $3,630. Dividends received on the stock held amounted to $1,760. During November 2008, Aragorn sold 200 shares of the Gimli stock at $17 per share and 250 shares of the Glorfindel stock at $19 per share. Give the journal entries required by Aragorn to record the (1) purchase of the debt and equity securities; (2) receipt of interest and dividends during 2008; and (3) sale of the equity securities during November.