In: Accounting
Bonita, Inc. had the following equity investment portfolio at
January 1, 2017.
Evers Company | 960 shares @ $14 each | $13,440 | |||
Rogers Company | 880 shares @ $20 each | 17,600 | |||
Chance Company | 520 shares @ $10 each | 5,200 | |||
Equity investments @ cost | 36,240 | ||||
Fair value adjustment | (7,300 | ) | |||
Equity investments @ fair value | $28,940 |
During 2017, the following transactions took place.
1. | On March 1, Rogers Company paid a $2 per share dividend. | |
2. | On April 30, Bonita, Inc. sold 320 shares of Chance Company for $11 per share. | |
3. | On May 15, Bonita, Inc. purchased 100 more shares of Evers Company stock at $17 per share. | |
4. | At December 31, 2017, the stocks had the following price per share values: Evers $18, Rogers $19, and Chance $9. |
During 2018, the following transactions took place.
5. | On February 1, Bonita, Inc. sold the remaining Chance shares for $9 per share. | |
6. | On March 1, Rogers Company paid a $2 per share dividend. | |
7. | On December 21, Evers Company declared a cash dividend of $3 per share to be paid in the next month. | |
8. | At December 31, 2018, the stocks had the following price per share values: Evers $20 and Rogers $21. |
Prepare journal entries for each of the above transactions.
2017 | Debit | Credit | ||
1 | Mar-01 | Cash | $ 1,760.00 | |
Dividend Revenue | $ 1,760.00 | |||
2 | Apr-30 | Cash | $ 3,520.00 | |
Gain on Sale of Invoice | $ 320.00 | |||
Equity Investments(Avail. For Sale) | $ 3,200.00 | |||
3 | May-15 | Equity Investments | $ 1,700.00 | |
Cash | $ 1,700.00 | |||
4 | Dec-31 | Fair Value Adjustments (Avail for Sale) | $ 10,160.00 | |
Unrealized Holding (Gain or Loss)Equity | $ 10,160.00 | |||
2018 | ||||
5 | Feb-01 | Cash | $ 1,800.00 | |
Loss on Sale of Invoice | $ 200.00 | |||
Equity Investments(Avail. For Sale) | $ 2,000.00 | |||
6 | Mar-01 | Cash | $ 1,760.00 | |
Dividend Revenue | $ 1,760.00 | |||
7 | Dec-21 | Dividends Receivable | 3180 | |
Dividend Revenue | 3180 | |||
8 | Dec-31 | Fair Value Adjustments (Avail for Sale) | $ 14,240.00 | |
Unrealized Holding (Gain or Loss)Equity | $ 14,240.00 |
Working Notes-
Cost | Fair Value | Unrealized Gain (Loss) | |
Evers Company | $ 15,140.00 | $ 19,080.00 | $ 3,940.00 |
Rogers Company | $ 17,600.00 | $ 16,720.00 | $ (880.00) |
Chance Company | $ 2,000.00 | $ 1,800.00 | $ (200.00) |
Total | $ 34,740.00 | $ 37,600.00 | $ 2,860.00 |
Previous securities fair value adjustment bal.—Cr | $ (7,300.00) | ||
Securities fair value adjustment—Dr. | $ 10,160.00 |
Cost | Fair Value | Unrealized Gain (Loss) | |
Evers Company | $ 15,140.00 | $ 21,200.00 | $ 6,060.00 |
Rogers Company | $ 17,600.00 | $ 18,480.00 | $ 880.00 |
Total | $ 32,740.00 | $ 39,680.00 | $ 6,940.00 |
Previous securities fair value adjustment bal.—Cr | $ (7,300.00) | ||
Securities fair value adjustment—Dr. | $ 14,240.00 |