Maxwell Company engaged in the following transactions involving short-term investments: a. Purchased 200 shares of Bartco stock
Question:
Maxwell Company engaged in the following transactions involving short-term investments:
a. Purchased 200 shares of Bartco stock for $12,800.
b. Received a $1.60-per-share dividend on the Bartco stock.
c. Sold 40 shares of the Bartco stock for $61 per share.
d. Purchased 380 shares of Newton stock for $20,900.
e. Received a dividend of $1.00 per share on the Newton stock.
At December 31, the Bartco stock has a market value of $60 per share, and the Newton stock has a market value of $59 per share.
Required:
1. Prepare entries for Maxwell’s journal to record these transactions assuming they are trading securities.
2. Calculate the market value of Maxwell’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?
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...
Step by Step Answer:
1 a InvestmentsTrading Securities 12800 Cash 12800 b Cash 200 160 320 Dividend Income 320 c Cash 40 ...View the full answer
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger
