In: Accounting
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 $20.25 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 $15.00 per share. Aug. 15 Received a(n) $0.80 per share cash dividend on the Gem Co. stock. 28 Sold 4,000 shares of Gem Co. stock at $27.00 per share. Oct. 1 Received a $1.80 per share cash dividend on the PepsiCo shares. Dec. 15 Received a $0.95 per share cash dividend on the remaining Gem Co. shares. 31 Received a $1.00 per share cash dividend on the PepsiCo shares.
Required: 1. Prepare journal entries to record the preceding transactions and events. 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., $22.50; PepsiCo, $51.25; and Xerox, $12.00. 3. Prepare an adjusting entry to record the year-end fair value adjustment for the portfolio of short-term stock investments.
Investment with intention to sale in short term are recorded as Investment at FVTPL, whereas all the gain and losses on valuation is part of income/loss which will ahve to be tranferred into Income statement on realisation.
The following entry is required to be made
please find enclosed images herewith.
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