1) On January 1, 2024, the Lorenzo Company sold $4,000,000 in 20-year 9% bonds.
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1) On January 1, 2024, the Lorenzo Company sold $4,000,000 in 20-year 9% bonds. Interest is payable on January 1 and July 1. The company uses the straight-line system to amortize the discount or premium on the bonds. The bonds were sold at 98. . a) Prepare the wage entry to record the bond issue on 1/1/2024. b) Prepare the Schedule to amortize the discount during the first two interest payment periods. c) Prepare journal entries for interest payment and discount amortization during 2024. 2) In January 2024 Mann Company management discovered that it had enough cash to purchase investments in Debt and Stock Securities. During the year the following transactions were carried out: February 1 Purchased 800 shares of SRI common stock for $32,000 plus broker commission of $800.00. This investment is temporary. Mar.1 Purchased 500 FGH common shares for $15,000 plus broker commissions of $300.00. With this purchase, they acquired 30% of the issued and outstanding shares of FGH April 1 Purchased 60 XYZ 12% $1,000 bonds for $60,000 plus $1,200 in broker commissions. July 1 Received a cash dividend of $.60 per SRI share. August 1 Sold 200 shares of SRI for $42.00 per share less $350.00 broker commission. Sept 1 Received a cash dividend of $1.00 per FGH share Oct. 1 Received semi-annual interest on XYZ bonds Oct 1 He sold XYZ’s bonds for $63,000 less broker commissions of $1,000. Dec. 31 FGH reported net income of $200,000. SRI reported a net income of $300,000 As of December 31, the Fair Market Value of SRI and FGH shares were $39.00 and $30.00 per share, respectively. Instructions: a) Prepare journal entries for all transactions. b) Prepare the adjustment entries as of December 31 to record the investments at Fair Market Value. All Securities are considered to be Trading Securities. c) Prepare the presentation in the Balance of Values as of December 31. d) Do the work using excel.
