Question

P12-3A Journalize transactions and adjusting entry for stock investments.
On December 31, 2015, Turnball Associates owned the following securities, held as a long-term
investment. The securities are not held for influence or control of the investee.
	Common Stock	Shares	Cost
	Gehring Co.	2,000	$60,000
	Wooderson Co.	5,000	45,000
	Kitselton Co.	1,500	30,000
On December 31, 2015, the total fair value of the securities was equal to its cost. In 2016,
the following transactions occurred.
July 1	Received $1 per share semiannual cash dividend on Wooderson Co. common stock.
Aug. 1	Received $0.50 per share cash dividend on Gehring Co. common stock.
Sept. 1	Sold 1,500 shares of Wooderson Co, common stock for cash at $8 per share.
Oct. 1	Sold 800 shares of Gehring Co. common stock for cash at $33 per share.
Nov. 1	Received $1 per share cash dividend on Kitselton Co. common stock.
Dec. 15	Received $0.50 per share cash dividend on Gehring Co. common stock.
Dec 31	Received $1 per share semiannual cash dividend on Wooderson Co. common stock.
At December 31, the fair values per share of the common stocks were Gehring Co. $32,
Wooderson Co. $8, and Kitselton Co. $18.
Instructions
(a) Journalize the 2016 transactions and post to the account Stock Investments. (Post in
T-account form.)
(b) Prepare the adjusting entry at December 31, 2016, to show the securities at fair value.
The stock should be classified as available-for-sale securities.
(c ) Show the balance sheet presentation of the investment-related accounts at December 31,
2016. At this date, Turnball Associates has common stock $1,500,000 and retained
earnings $1,000,000.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a)	2016
	July 1	Account				Value
			Account				Value
	Aug 1	Account				Value
			Account				Value
	Sept. 1	Account				Value
		Account				Value
			Account				Value
	Oct.1	Account				Value
			Account				Value
			Account				Value
	Nov. 1	Account				Value
			Account				Value
	Dec. 15	Account				Value
			Account				Value
	Dec. 31	Account				Value
			Account				Value
	Stock Investments
	2016		2016
	Jan. 1 Balance	Value	Sept. 1	Value
			Oct. 1	Value
	2016
	Dec. 31 Balance	Value
(b)	Dec.31	Account				Value
			Account				Value
	Security	Cost	Fair Value
	Gehring Co.	Value	Value
	Wooderson Co.	Value	Value
	Kitselton Co.	Value	Value
		?	?
(c)	Investments
	Investments in stock of less than 20%
	owned companies, at fair value				Value
	Stockholders' equity
	Common stock			Value
	Retained earnings			Value
	Total paid-in capital and retained earnings			?
	Less: Unrealized loss on available-for-sale securities			Value
	Total stockholders' equity				?
After you have completed P12-3A, consider the additional question.
1.	Assume that number of shares of Wooderson Co. sold changed to 2,000 shares.
	Show impact on the journal entries and presentation in balance sheet.
	Please make it typed.

Answer 1

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		A	B	C	D	E=D-C	F	G=A-F	G*E	C*G	D*G
Working-1		Shares	Cost	Per Share	Fair Value	Adjustment	Sold Share	Remaining Share	Adjustment Value	Cost of Remaining Share	Fair Value of Remainig Sahre
	Gehring Co	2000	60000	30	32	2	800	1200	2400	36000	38400
	Wooderson Co	5000	45000	9	8	-1	1500	3500	-3500	31500	28000
	Kitselton Co	1500	30000	20	18	-2	0	1500	-3000	30000	27000
	Total								-4100	97500	93400
a. Journal Entries
Date	Account	Debit	Credit
July 1 2016	Cash (5000*1)	5000
	Dividend Revenue		5000
	(being recorded cash dividend on Wooderson Co. common stock)
Aug 1 2016	Cash (2000*0.5)	1000
	Dividend Revenue		1000
	(being recorded cash dividend on Gehring Co. common stock.)
Sept 1 2016	Cash (1500*8)	12000
	Loss on sale of available-for-sale securities 1500*(9-8)	1500
	Stock Investment (1500*9) From working-1		13500
	(sale of wooderson co 1500 shares at loss of $1)
Oct 1 2016	Cash (800*33)	26400
	Gain on sale of available-for-sale securities 800*(33-30)		2400
	Stock Investment (800*30) From working-1		24000
	(sale of gehring co 800 shares at profit of $3)
Nov 1 2016	Cash (1500*1)	1500
	Dividend Revenue		1500
	(being recorded cash dividend on Kitselton Co. common stock.)
Dec 15 2016	Cash (2000-800)-*0.5	600
	Dividend Revenue		600
	(being recorded cash dividend on Gehring Co. common stock.)
Dec 31 2016	Cash (5000-1500)*1	3500
	Dividend Revenue		3500
	(being recorded cash dividend on Wooderson Co. common stock)
b. Adjusting Entry
Dec 31 2016	Securities Fair Value adjustment-Available for sale securities	4100
	Stock Investment (workin-1)		4100
	(Stock adjusted to Fair Value)
c. Balance Sheet
	Investment in stock of less than 20% owned copanies at fair value		93400
	Stockholder Equity:
	Common Stock	1500000
	Retained Earning	1000000
	Total Paid in capital and retained earning	2500000
	Less: Fair Value Adjustment	4100
	Total Stock Holder Equity		2495900