Question

Problem 15-4A Recording, adjusting, and reporting stock investments with insignificant influence LO P4

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Rose Company had no short-term investments prior to this year. It had the following transactions this year involving short-term stock investments with insignificant influence.

Apr.		16		Purchased 8,000 shares of Gem Co. stock at $24.50 per share.
July		7		Purchased 4,000 shares of PepsiCo stock at $54.00 per share.
		20		Purchased 2,000 shares of Xerox stock at $17.00 per share.
Aug.		15		Received a(n) $0.90 per share cash dividend on the Gem Co. stock.
		28		Sold 4,000 shares of Gem Co. stock at $31.25 per share.
Oct.		1		Received a $1.80 per share cash dividend on the PepsiCo shares.
Dec.		15		Received a $1.05 per share cash dividend on the remaining Gem Co. shares.
		31		Received a $1.40 per share cash dividend on the PepsiCo shares.

Problem 15-4A Part 2

2. Prepare a table to compare the year-end cost and fair values of Rose's short-term stock investments. The year-end fair values per share are Gem Co., $26.75; PepsiCo, $51.25; and Xerox, $14.00.

cost	fair value	unrealized amount

Answer 1

1.)	Date	Account Titles	Debit $	Credit $
	Apr.16	Investment in Gem Co.	196,000
		Cash ( 8,000 x 24.50 )		196,000
	July.7	Investment in Pepsico.	216,000
		Cash ( 4,000 x 54 )		216,000
	July.20	Investment in Xerox	34,000
		Cash ( 2,000 x 17 )		34,000
	Aug.15	Cash ( 8,000 x 0.90 )	7,200
		Dividend Revenue		7,200
	Aug.28	Cash ( 4,000 x 21.50 )	86,000
		Loss on sale of Investment-I/S	12,000
		Investment in Gem Co.		98,000
		( 4,000 x 24.50 )
	Oct.1	Cash ( 4,000 x 1.50 )	6,000
		Dividend Revenue		6,000
	Dec.15	Cash ( 4,000 x 1.05 )	4,200
		Dividend Revenue		4,200
	Dec.31	Cash ( 4,000 x 1.40 )	5,600
		Dividend Revenue		5,600
2.)	Share	Number of Shares	Cost $-A	Fair Value $-B	Unrealized Gain or (loss) B-A
	Gem Co.	4,000	98,000	107,000	9,000
	PepsiCo.	4,000	216,000	205,000	-11,000
	Xerox	2,000	34,000	28,000	-6,000