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Rose Company had no short-term investments prior to this year. It had the following transactions this...

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.

Solutions

Expert Solution

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.

Please provide your valuable inputs.

thanks,

ekkarill92 answered 2 years ago
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