In January 2022, the management of Northern Company concludes that it has sufficient cash to purchase some

Question:

In January 2022, the management of Northern Company concludes that it has sufficient cash to purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred.
Jan. 1 Purchased 70 $1,000, 8% TRC bonds for $70,000. Interest is payable annually on December 31.
Feb. 1 Purchased 1,200 shares of LAF common stock for $51,600.
Mar. 1 Purchased 500 shares of NCL common stock for $18,500.
July 1 Received a cash dividend of $0.80 per share on the LAF common stock.
Aug. 1 Sold 200 shares of LAF common stock at $42 per share.
Sept. 1 Received $2 per share cash dividend on the NCL common stock.
Dec. 31 Received the annual interest on the TRC bonds.
Dec. 31 Sold the TRC bonds for $75,700.
At December 31, the fair values of the LAF and NCL common stocks were $39 and $30 per share, respectively. These stock investments by Northern Company provide less than a 20% ownership interest.

Instructions
a. Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.)
b. Prepare the adjusting entry at December 31, 2022, to report the investments at fair value.
c. Show the balance sheet presentation of investment securities at December 31, 2022.
d. Identify the income statement accounts and give the statement classification of each account.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... 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...

Fantastic news! We've Found the answer you've been seeking!