Question

Riverbed Ltd. had the following investment portfolio at January 1, 2020:

Investment		Quantity			Cost per Share			Fair Value at Dec. 31, 2019
Earl Corp.		950			$14.90			$10.60
Josie Corp.		830			19.90			15.60
Asher Corp.		500			8.10			7.10

During 2020, the following transactions took place:

1.		On March 1, Josie Corp. paid a $2 per share dividend.
2.		On April 30, Riverbed sold 300 shares of Asher Corp. for $9.90 per share.
3.		On May 15, Riverbed purchased 200 more Earl Corp. shares at $15.90 per share.
4.		At December 31, 2020, the shares had the following market prices per share: Earl Corp. $16.90; Josie Corp. $18.90; and Asher Corp. $7.90.

During 2021, the following transactions took place:

5.		On February 1, Riverbed sold the remaining Asher Corp. shares for $6.90 per share.
6.		On March 1, Josie Corp. paid a $2 per share dividend.
7.		On December 21, Earl Corp. declared a cash dividend of $3 per share to be paid in the next month.
8.		At December 31, 2021, the shares had the following market prices per share: Earl Corp. $18.90 and Josie Corp. $20.90.

Answer 1

Journal Entries:

No.	Date	Account Titles and Explanation	Debit	Credit
	2020
1	Mar. 1	Cash	$1,660
		Dividend Revenue (830 * $2)		$1,660
		(To record the receipt of cash dividends)
2	Apr. 30	Cash (300 * $9.90)	$2,970
		Gain on sale of Investments ($2,970 - $2,130)		$840
		Investments in Asher Corp. (300 * $7.10)		$2,130
		(To record the sales of shares)
3	May. 15	Investments in Earl Corp. (200 * $15.90)	$3,180
		Cash		$3,180
		(To record the purchase of shares in outside company)
4	Dec. 31	Investments in Earl Corp. [($16.90 - $15.90 = $1 * 200) + ($16.90 - $10.60 = $6.30 * 950)]	$6,185
		Fair Value Adjustment		$6,185
		(To record the fair value adjustment)
	Dec. 31	Investments in Josie Corp. ($18.90 - $15.60 = $3.30 * 830)	$2,739
		Fair Value Adjustment		$2,739
		(To record the fair value adjustment)
	Dec. 31	Investments in Asher Corp. ($7.90 - $7.10 = $0.80 * 200); (500 - 300 = 200)	$160
		Fair Value Adjustment		$160
		(To record the fair value adjustment)
	2021
5	Feb. 1	Cash (200 * $6.90)	$1,380
		Loss on sale of Investments ($1,580 - $1,380)	$200
		Investments in Asher Corp. (200 * $7.90)		$1,580
		(To record the sales of shares)
6	Mar. 1	Cash	$1,660
		Dividend Revenue (830 * $2)		$1,660
		(To record the receipt of cash dividends)
7	Dec. 31	Dividends Receivable	$3,450
		Dividend Revenue (950 + 200 = 1,150 * $3)		$3,450
		(To record the cash dividends receivable)
8	Dec. 31	Investments in Earl Corp. ($18.90 - $16.90 = $2*1,150)	$2,300
		Fair Value Adjustment		$2,300
		(To record the fair value adjustment)
	Dec. 31	Investments in Josie Corp. ($20.90 - $18.90 = $3.30 * 830)	$2,739
		Fair Value Adjustment		$2,739
		(To record the fair value adjustment)