E7-9 This information relates to the Cash account in the ledger of Hawkins Company.Balance September 1$16,400; Cash deposited$64,000Balance September 30$17,600; Checks written$62,800The September bank statement shows a balance of $16,500 at September 30 and the followingmemoranda.Credits DebitsCollection of $1,800 note plus interest $30 $1,830 NSF check: H. Juno $560Interest earned on checking account 45 Safety deposit box rent 60At September 30, deposits in transit were $4,738 and outstanding checks totaled $2,383.Instructions(a) Prepare the bank reconciliation at September 30, 2012.(b) Prepare the adjusting entries at September 30, assuming (1) the NSF check was froma customer on account, and (2) no interest had been accrued on the note.
In January 2012, the management of Sarah Company concludes that it has sufficientcash to purchase some short-term investments in debt and stock securities. Duringthe year, the following transactions occurred.Feb. 1 Purchased 1,200 shares of NJF common stock for $50,600 plus brokeragefees of $1,000.Mar. 1 Purchased 500 shares of SEK common stock for $18,000 plus brokeragefees of $500.Apr. 1 Purchased 70 $1,000, 8% CRT bonds for $70,000 plus $1,200 brokeragefees. Interest is payable semiannually on April 1 and October 1.July 1 Received a cash dividend of $0.80 per share on the NJF common stock.Aug. 1 Sold 200 shares of NJF common stock at $42 per share less brokeragefees of $350.Sept. 1 Received $2 per share cash dividend on the SEK common stock.Oct. 1 Received the semiannual interest on the CRT bonds.Oct. 1 Sold the CRT bonds for $77,000 less $1,300 brokerage fees.At December 31, the fair values of the NJF and SEK common stocks were $39 and $30per share, respectively.Instructions(a) Journalize the transactions and post to the accounts Debt Investments and StockInvestments. (Use the T account form.)(b) Prepare the adjusting entry at December 31, 2012, to report the investments at fairvalue. All securities are considered to be trading securities.(c) Show the balance sheet presentation of investment securities at December 31, 2012.(d) Identify the income statement accounts and give the statement classification of eachaccount.
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