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Question: Problem 16-05A a-d (Part Level Submission) The following securities are in Wildhorse Company’s po...
Problem 16-05A a-d (Part Level Submission)
The following securities are in Wildhorse Company’s portfolio of long-term securities at December 31, 2020.
Cost |
||
1,200 shares of Willhite Corporation common stock | $60,000 | |
1,200 shares of Hutcherson Corporation common stock | 69,600 | |
1,000 shares of Downing Corporation preferred stock | 26,000 |
On December 31, 2020, the total cost of the portfolio equaled total
fair value. Wildhorse had the following transactions related to the
securities during 2021.
Jan. | 20 | Sold all 1,200 shares of Willhite Corporation common stock at $53 per share. | |
28 | Purchased 540 shares of $72 par value common stock of Liggett Corporation at $80 per share. | ||
30 | Received a cash dividend of $1.45 per share on Hutcherson Corp. common stock. | ||
Feb. | 8 | Received cash dividends of $0.40 per share on Downing Corp. preferred stock. | |
18 | Sold all 1,000 shares of Downing Corp. preferred stock at $25 per share. | ||
July | 30 | Received a cash dividend of $1.00 per share on Hutcherson Corp. common stock. | |
Sept. | 6 | Purchased an additional 860 shares of $15 par value common stock of Liggett Corporation at $84 per share. | |
Dec. | 1 | Received a cash dividend of $1.20 per share on Liggett Corporation common stock. |
At December 31, 2021, the fair values of the securities were:
Hutcherson Corporation common stock | $62 per share | |
Liggett Corporation common stock |
$74 per share |
Prepare journal entries to record the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
Post to the investment accounts. (Use T-accounts.)
(Post entries in the order of journal entries presented
in the previous part.)
Date | Account Tittle | Debit | Credit |
Jan-20 | Cash | $ 63,600.00 | |
Profit on sale | $ 3,600.00 | ||
Investment in Willhite Corporation | $ 60,000.00 | ||
(To Record sale of 1200 shares of willhite corporation) | |||
Jan-28 | Investment in Liggett Corporation (540*80) | $ 43,200.00 | |
Cash | $ 43,200.00 | ||
(To record purchase of 540 shares of Liggett having par value of $80) | |||
Jan-30 | Cash | $ 1,740.00 | |
Dividend Income | $ 1,740.00 | ||
(To record dividend on hutcherson @ 1.45 per share) | |||
Feb-08 | Cash | $ 400.00 | |
Dividend Income | $ 400.00 | ||
(To record dividend on Downing Prefered stock @ 0.40 per share) | |||
Feb-18 | Cash | $ 25,000.00 | |
Loss on sale | $ 1,000.00 | ||
Investment in Downing Corporation | $ 26,000.00 | ||
(To Record sale of 1000 shares of willhite corporation) | |||
Jul-30 | Cash | $ 1,200.00 | |
Dividend Income | $ 1,200.00 | ||
(To record dividend on hutcherson @ 1 per share) | |||
Sep-06 | Investment in Liggett Corporation | $ 72,240.00 | |
Cash | $ 72,240.00 | ||
(To record purchase of 860 shares of Liggett having par value of $10) | |||
Dec-01 | Cash | $ 1,680.00 | |
Dividend Income | $ 1,680.00 | ||
(To record dividend on Liggett @ 1.20 per share) | |||
Dec-31 | Fair Value Adjustment-Trading(1200*62-69600) | $ 4,800.00 | |
Unrealized Gain-Income | $ 4,800.00 | ||
To record unrealized gain on hutcherson stock) | |||
Dec-31 | Unrealized Loss (72240+ 43200- 1400*74) | $ 11,840.00 | |
Fair Value Adjustment-Trading | $ 11,840.00 | ||
To record unrealized loss on Liggett stock) |
Investment in Willhite Corporation. Common Stock | |||||
Jan-01 | Opening Balance | $ 60,000 | Jan-20 | Cash | $ 63,600 |
Gain on available for sale securities | $ 3,600 | ||||
$ 63,600 | |||||
Ending Balance | $ - | ||||
Investment in Liggett Corporation Common Stock | |||||
Jan-28 | Cash | $ 43,200 | Dec-31 | Unreliazed Loss on available for sale securities | $ 11,840 |
Sep-06 | Cash | $ 72,240 | |||
Ending Balance | $ 103,600 | ||||
Investment in Downing Corporation preferred stock | |||||
Jan-01 | Opening Balance | $ 26,000 | Feb-28 | Cash | $ 25,000 |
Loss on available for sale securities | $ 1,000 | ||||
Ending Balance | $ - | ||||
Investment in Hutcherson Corporation | |||||
Jan-01 | Opening Balance | $ 69,600 | Dec-31 | Unreliazed Loss on available for sale securities | $ 4,800 |
Ending Balance | $ 64,800 |