Question

Bentz Corporation bought and sold several securities during 2021. Listed below is a summary of the transactions: February 17 Purchased $102,000 of U.S. Treasury 6% bonds at par plus accrued interest of $1,000. The security is to be held for short-term profits. April 10 Purchased 500 shares of Gauges Inc. common stock at $140 per share. This security will be held for an unspecified period of time. Sold 100 shares of Gauges Inc. for $150 per share. August October 5 Sold half of the U.S. Treasury bonds for $51,500 plus accrued interest of $300. Required: Prepare the journal entries for the above transactions.

Answer 1

The journal entries for Bentz Corporation's transactions are: 1. Purchased U.S. Treasury Bonds - Debit: $102,000, Credit: $103,000. 2. Purchased Gauges Inc. Common Stock - Debit: $70,000, Credit: $70,000. 3. Sold 100 shares of Gauges Inc. - Debit: $15,000, Credit: $14,000 (stock) + $1,000 (gain). 4. Sold half of the U.S. Treasury Bonds - Debit: $52,000 (bonds) + $300 (accrued interest), Credit: $52,000 (cash) + $300 (gain).

Step-by-step explanation:

Journal entries are used to record financial transactions in a company's accounting system. Let's prepare the journal entries for the transactions in the question:

February 17:

Debit: U.S. Treasury Bonds - $102,000

Credit: Cash - $103,000

April 10:

Debit: Gauges Inc. Common Stock - $70,000

Credit: Cash - $70,000

April 10:

Debit: Cash - $15,000

Credit: Gauges Inc. Common Stock - $14,000

Credit: Gain on Sale of Stock - $1,000

August 5:

Debit: Cash - $52,000

Debit: Accrued Interest Receivable - $300

Credit: U.S. Treasury Bonds - $52,000

Credit: Gain on Sale of Bonds - $300