In: Finance
Journalize investment transactions, prepare adjusting entry, and show statement presentation. |
In January 2017, the management of Kirry Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred. |
Feb. | 1 | Purchased 800 shares of Merge common stock for $46,400. |
Mar. | 1 | Purchased 1,500 shares of Taft common stock for $25,500. |
Apr. | 1 | Purchased 75 $1,000, 9% Yale bonds for $76,500. Interest is payable semiannually on April 1 and October 1. |
July | 1 | Received a cash dividend of $1.30 per share on the Merge common stock. |
Aug. | 1 | Sold 500 shares of Merge common stock at $59 per share. |
Sept. | 1 | Received a $2.5 per share cash dividend on the Taft common stock. |
Oct. | 1 | Received the semiannual interest on the Yale bonds. |
Oct. | 1 | Sold the Yale bonds for $73,800. |
At December 31, the fair value of the Merger common stock was $57 per share. The fair value of the Tatman common stock was $17 per share. | ||
Instructions | ||
(a) Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.) | ||
(a) Prepare the adjusting entry at December 31, 2017, to report the investment securities at fair value. All securities are considered to be trading securities. | ||
(c) Show the balance sheet presentation of investment securities at December 31, 2017. | ||
(d) Identify the income statement accounts and give the statement classification of each account. |