Morton Products had no investment in available-for-sale securities at January 1, 2009. During 2009, Morton engaged in

Question:

Morton Products had no investment in available-for-sale securities at January 1, 2009.

During 2009, Morton engaged in the following marketable security transactions:

a. Purchased 400 shares of Sterling Company stock for $24 per share.

b. Purchased 600 shares of Burt Corporation stock for $32 per share.

c. Received a $2-per-share dividend on the Sterling stock.

d. Sold 250 shares of the Sterling stock for $27 per share.

At the end of 2009, the Sterling stock had a market value of $26 per share, and the Burt stock had a market value of $29 per share.

Required:

1. Prepare journal entries for each of the four transactions assuming they are classified as available-for-sale securities.

2. If necessary, prepare a journal entry to recognize the December 31, 2009, market values. What is the income statement effect of this entry?

3. How would these investments be reported on the December 31, 2009, balance sheet?

Corporation
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