Answer to Question #270225 in Finance for Sindi Mio

Question

1-On June 1, 199X firm T bought 100 bonds with a nominal value of 1,000 ALL each, 10% annual interest and 12 months term.

2-On September 1.199X firm T bought 50 shares of corporation A with a nominal value of 2,000 ALL each.

3-On 30.December.199X firm T calculated and recorded the interest realized on the bonds for the period 1.June-30.December.199X.

4-On 31.199.199X1 corporation A declared dividends belonging to the shares owned by firm T for an amount of 4,000 ALL.

5-On February 10, corporation A paid dividends to firm T for the amount of 4,000 ALL.

6-On March 1, 30 bonds were sold at a market price of 900 ALL each.

Required: To reflect economic events in the form of effects +/- in the relevant accounts

Answer 1

1.Debit "Financial investments" (+) Credit "Settlement account"  (-) - 100 000 (1000*100)

2.Debit "Financial investments" (+) Credit "Settlement account"  (-) - 100 000 (50*2000)

3.Debit "Settlements with different debtors and creditors" (+) Credit "Other income and expenses" (+)

Debit "Settlement account" (+) Credit "Settlements with different debtors and creditors" (+)

4.Debit "Settlements with different debtors and creditors" (+) Credit "Other income and expenses" (+) - 4000

5.Debit "Settlement account" (+) Credit "Settlements with different debtors and creditors" (+) - 4000

6.Debit "Settlement account" (+) Credit "Financial investments" (-) - 90 000 (900*100)