Question

Problem 16-05A a-d (Part Level Submission)

The following securities are in Wildhorse Company’s portfolio of long-term securities at December 31, 2020.

		Cost
1,200 shares of Willhite Corporation common stock		$60,000
1,200 shares of Hutcherson Corporation common stock		69,600
1,000 shares of Downing Corporation preferred stock		26,000

On December 31, 2020, the total cost of the portfolio equaled total fair value. Wildhorse had the following transactions related to the securities during 2021.

Jan.	20		Sold all 1,200 shares of Willhite Corporation common stock at $53 per share.
	28		Purchased 540 shares of $72 par value common stock of Liggett Corporation at $80 per share.
	30		Received a cash dividend of $1.45 per share on Hutcherson Corp. common stock.
Feb.	8		Received cash dividends of $0.40 per share on Downing Corp. preferred stock.
	18		Sold all 1,000 shares of Downing Corp. preferred stock at $25 per share.
July	30		Received a cash dividend of $1.00 per share on Hutcherson Corp. common stock.
Sept.	6		Purchased an additional 860 shares of $15 par value common stock of Liggett Corporation at $84 per share.
Dec.	1		Received a cash dividend of $1.20 per share on Liggett Corporation common stock.

At December 31, 2021, the fair values of the securities were:

Hutcherson Corporation common stock		$62 per share
Liggett Corporation common stock		$74 per share

Prepare journal entries to record the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Answer 1

Date	Account Tittle	Debit	Credit
Jan-20	Cash	$63,600.00
	Profit on sale		$3,600.00
	stock investment		$60,000.00
	(To Record sale of 1200 shares of willhite corporation)
Jan-28	stock investment (540*80)	$43,200.00
	Cash		$43,200.00
	(To record purchase of 540 shares of Liggett having par value of $80)
Jan-30	Cash	$1,740.00
	Dividend Income		$1,740.00
	(To record dividend on hutcherson @ 1.45 per share)
Feb-08	Cash	$400.00
	Dividend Income		$400.00
	(To record dividend on Downing Prefered stock @ 0.40 per share)
Feb-18	Cash	$25,000.00
	Loss on sale	$1,000.00
	stock investment		$26,000.00
	(To Record sale of 1000 shares of willhite corporation)
Jul-30	Cash	$1,200.00
	Dividend Income		$1,200.00
	(To record dividend on hutcherson @ 1 per share)
Sep-06	stock investment	$72,240.00
	Cash		$72,240.00
	(To record purchase of 860 shares of Liggett having par value of $10)
Dec-01	Cash	$1,680.00
	Dividend Income		$1,680.00
	(To record dividend on Liggett @ 1.20 per share)
Dec-31	Fair Value Adjustment-Trading(1200*62-69600)	$4,800.00
	Unrealized Gain-Income		$4,800.00
	To record unrealized gain on hutcherson stock)
Dec-31	Unrealized Loss (72240+ 43200- 1400*74)	$11,840.00
	Fair Value Adjustment-Trading		$11,840.00
	To record unrealized loss on Liggett stock)

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