Question

You are working for The Wellington Company on temporary assignment while one of the accountants is on family leave. You have been asked to review the company’s investment

The balance sheet caption used to report long-term investments in stocks not intended as a source of cash in the normal operations of the business.

journal entries and provide necessary information to the accountant preparing the financial statements.

PAGE 8

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1	Jan. 17	Investment-Red Rock Co. Stock		37,400.00
2		Cash			37,400.00
3	Feb. 5	Investment-Sunset Village Bonds		34,000.00
4		Interest Receivable		290.00
5		Cash			34,290.00
6	23	Investment-Mays and Co. Stock		25,500.00
7		Cash			25,500.00
8	Mar. 31	Cash		340.00
9		Interest Receivable			290.00
10		Interest Revenue			50.00
11	Apr. 6	Investment in Minions Corp. Stock		170,000.00
12		Cash			170,000.00
13	30	Cash		750.00
14		Dividend Revenue			750.00
15	Jul. 1	Cash		18,162.00
16		Loss on Sale of Investments		2,448.00
17		Interest Revenue			210.00
18		Investment-Sunset Village Bonds			20,400.00
19	Aug. 14	Cash		41,300.00
20		Gain on Sale of Investments			1,800.00
21		Investment-Harding Construction Stock			39,500.00
22	27	Cash		3,400.00
23		Investment in Minions Corp. Stock			3,400.00
24	Sep. 22	Cash		29,000.00
25		Gain on Sale of Investments			3,500.00
26		Investment-Mays and Co. Stock			25,500.00
27	30	Cash		130.00
28		Interest Revenue			130.00
29	Nov. 1	Investment in Minions Corp. Stock		15,300.00
30		Income of Minions Corp.			15,300.00
31	Dec. 31	Unrealized Loss on Available-For-Sale Investments		3,275.00
32		Valuation Allowance for Available-For-Sale Investments			3,275.00
33	31	Valuation Allowance for Trading Investments		2,150.00
34		Unrealized Gain on Trading Investments			2,150.00

The accountant preparing the financial statements has asked you to provide the fair value as of the end of the year for the investments. Present the information as it would be shown on the financial statements. Last year, The Wellington Company reported costs of $68,000 in trading investments and $82,000 in available-for-sale investments. Refer to the journal entries shown on The Wellington Company panel. Assume that all investments sold during this year were trading investments and that purchases during the year were new investments.

Trading Securities
Trading investments at cost	?
Plus valuation allowance for trading investments	2150
Trading investments at fair value	?

Available-For-Sale Securities
Available-for-sale investments at cost	?
Less valuation allowance for available-for-sale investments	3275
Available-for-sale investments at fair value	?

Answer 1