Margies Company engaged in the following transactions involving short-term investments: a. Purchased 200 shares of Softco stock

Question:

Margie’s Company engaged in the following transactions involving short-term investments:

a. Purchased 200 shares of Softco stock for $25,600.

b. Received a $3.20-per-share dividend on the Softco stock.

c. Sold 80 shares of the Softco stock for $122 per share.

d. Purchased 380 shares of Kepler stock for $41,800.

e. Received a dividend of $2.00 per share on the Kepler stock.

At December 31, the Softco stock has a market value of $120 per share, and the Kepler stock has a market value of $118 per share.

Required:

1. Prepare entries for Margie’s journal to record these transactions assuming they are trading securities.

2. Calculate the market value of Margie’s short-term investment portfolio at December 31.

3. Provide the necessary adjusting entry at December 31.

4. What is the income statement effect of the adjusting entry?

5. How would these investments be reported on the December 31 balance sheet?

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... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...