Assessing Financial Statement Effects of Trading and Available-for-Sale Securities (a) Use the financial statement effects templ
ate to record the following four transactions involving investments in marketable securities. Assume that these transactions occur in 2018. Purchased 6,000 common shares of Liu, Inc., at $12 cash per share. Received a cash dividend of $1.20 per common share from Liu. Year-end market price of Liu common stock is $11.25 per share. Sold all 6,000 common shares of Liu for $66,300.(b) Using the same transaction information as above, complete the financial statement effects template assuming the investments in marketable securities are classified as available-for-sale.
1 answer:
Answer:
Preparation of the Balance sheet and Income statement
Explanation:
The preparation of the Balance sheet and Income statement is shown in the excel sheet
Balance Sheet is the most important part of the accounting. It contains with two sides that is Assets, Liabilities and stock holder equity. In balance sheet we classify Cash Asset, Cash Asset, Non cash Assets, Liabilities, Contributed Capital and Earned Capital.
On the other hand in Income statement we classify Revenue, Expenses, Net Income.
Please find the excel sheet below
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Answer:
Debit cash by $71,250, factoring expense by $3,750 and credit account receivable by $75,000.
Explanation:
Step 1 of 2
Calculate the amount of factoring fee.
Factoring fee = 5% ×Account Receivable
=5%×$75,000
=$3,750
Step 2 of 2. Journey record. Image attached.
Debit cash by $71,250, factoring expense by $3,750 and credit account receivable by $75,000.
