Question

Chapter 12 Investments (Intermediate Accounting - Spiceland)

Jasper Company completed the following securities transactions during 2018:

March 1 Purchased 500 shares of Thomas Corporation common stock @ $20 per share plus a brokerage fee of $100. Jasper classified these shares as trading securities.

April 1 Bought 30,000 of the 100,000 outstanding shares of Worth Stores common stock for $300,000 (please pay close attention to the percentage of ownership).

June 25 Received a $1.20 per share dividend on the Thomas Corporation stock.

June 30 Worth Stores paid $20,000 in dividends to its stockholders.

October 1 Purchased 2,000 shares of Alpha Company for $15 per share plus a brokerage fee of $400. Jasper classified these shares as available-for-sale securities.

November 6 Sold the Thomas Corporation shares of $25 per share less a brokerage fee of $250.

December 31 Alpha shares are selling for $12 per share.

December 31 Worth Stores paid $50,000 in dividends and earned a net income of $200,000.

Prepare the necessary journal entries to record the above transactions including any year-end fair value adjustments.

List of Accounts:

Accumulated Other Comprehensive Loss
Allowance for Loss on Debt Investment
Bonds Payable
Cash
Call Option
Common Stock
Cost of Goods Sold
Debt Investments
Dividend Revenue
Dividend Receivable
Equity Investments
Fair Value Adjustment
Futures Contract
Gain on Sale of Investments
Gain on Settlement of Call Option
Gain on Settlement of Put Option
Interest Expense
Interest Receivable
Interest Revenue
Inventory
Investment Income
Loss on Impairment
Loss on Sale of Investments
Loss on Settlement of Call Option
Loss on Settlement of Put Option
No Entry
Notes Payable
Paid-in Capital in Excess of Par - Common Stock
Put Option
Recovery of Loss from Impairment
Retained Earnings
Sales Revenue
Swap Contract
Unrealized Holding Gain or Loss - Equity
Unrealized Holding Gain or Loss - Income

I would like some assistance with the bolded transactions only. Thank you!

Answer 1

Solution:

Journal Entries - Jasper Company
Date	Particulars	Debit	Credit
1-Mar	Equity Investment Dr	$10,100.00
	To Cash		$10,100.00
	(Being 500 shares of Thomas Corporation purchased @ $20 per share plus a brokerage fee of $100. Investment classified under held for trading)
1-Apr	Equity Investment Dr	$300,000.00
	To Cash		$300,000.00
	(Being 30% equity of worth store purchased to acquire significant influence)
25-Jun	Cash Dr (500*$1.20)	$600.00
	To Dividend Revenue		$600.00
	(Being dividend received on Thomas corporation shares)
30-Jun	Cash Dr ($20000*30%)	$6,000.00
	To Equity Investment		$6,000.00
	(Being dividend received on worth stores shares)
1-Oct	Equity Investment Dr	$30,400.00
	To Cash		$30,400.00
	(Being 2000 shares of Alpha company purchased @ $15 per share plus a brokerage fee of $400. Investment classified under Available for sale category)
6-Nov	Cash Dr (500*$25 - $250)	$12,250.00
	To Equity Investment		$10,100.00
	To Gain on sale of investment		$2,150.00
	(Being share of Thomsan corporation sold at $25 per share less brokerage of $250)
31-Dec	Unrealized Holding Gain or Loss - Equity	$6,400.00
	To Fair Value Adjustment		$6,400.00
	(Being fair value adjustment of share of alpha company recorded)
31-Dec	Equity Investment Dr ($200,000*30%)	$60,000.00
	To Investment Income		$60,000.00
	(Being share of income in worth stores holding recorded)
31-Dec	Cash Dr ($50000*30%)	$15,000.00
	To Equity Investment		$15,000.00
	(Being dividend received on worth stores shares)