During the fourth quarter of 2010, Main St., Inc., generated excess cash, which the company invested in

Question:

During the fourth quarter of 2010, Main St., Inc., generated excess cash, which the company invested in trading securities, as follows:

2010

Nov 13 Purchased 1,200 common shares as an investment in trading securities, paying $10 per share.

Dec 14 Received cash dividend of $0.48 per share on the trading securities.

Dec 31 Adjusted the securities to their market value of $7 per share.

Requirements

1. Open T-accounts for Cash (including its beginning balance of $22,000), Short-Term Investment, Dividend Revenue, and Unrealized Gain (Loss) on Investment.

2. Journalize the foregoing transactions and post to the T-accounts.

3. Show how to report the short-term investment on Main St.’s balance sheet at December 31.

4. Show how to report whatever should appear on Main St.’s income statement for the year ended December 31, 2010.

5. Main St. sold the trading securities for $10,512 on January 21, 2011. Journalize the sale.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...