Reference no: EM131534918

Question: Prepare journal entries to record the following transactions involving both the short-term and long-term investments of Sophia Corp., all of which occurred during calendar year 2011. Use the account Short-Term Investments for any transactions that you determine are short term.

a. On February 15, paid $150,000 cash to purchase American General's 120-day short-term notes at par, which are dated February 15 and pay 10% interest (classified as held-to-maturity).

b. On March 22, bought 700 shares of Frain Industries common stock at $25 cash per share plus a $250 brokerage fee (classified as long-term available-for-sale securities).

c. On June 15, received a check from American General in payment of the principal and 120 days' interest on the notes purchased in transaction a.

d. On July 30, paid $50,000 cash to purchase MP3 Electronics' 8% notes at par, dated July 30, 2011, and maturing on January 30, 2012 (classified as trading securities).

e. On September 1, received a $0.50 per share cash dividend on the Frain Industries common stock purchased in transaction b.

f. On October 8, sold 350 shares of Frain Industries common stock for $32 cash per share, less a $175 brokerage fee.

g. On October 30, received a check from MP3 Electronics for three months' interest on the notes purchased in transaction d.