The following securities are in Morales Company's portfolio of long-term availablefor-

sale securities at December 31, 2006.

On December 31, 2006. the total cost of the portfolio equaled total fair value. Morales had the following transactions related to the securities during 2007.
Jan. 20 Sold 1,000 shares of Abel Corporation common stock at $54 per share less brokerage fees of $600.
28 Purchased 400 shares of $70 par value common stock of Nolan Corporation at $78 per share, plus brokerage fees of $480.
30 Received a cash dividend of $1.15 per share on HAL Corp. common stock.
Feb. 8 Received cash dividends of $0.40 per share on Reese Corp. preferred stock.
18 Sold all 1,200 shares of Reese Corp. preferred stock at $26 per share less brokerage fees of $360.
July 30 Received a cash dividend of $1.00 per share on HAL Corp. common stock.
Sept. 6 Purchased an additional 600 shares of $10 par value common stock of Nolan Corporation at $82 per share, plus brokerage fees of $800.
Dec. 1 Received a cash dividend of $1.50 per share on Nolan Corporation common stock.
At December 31, 2007, the fair values of the securities were:

Morales Company uses separate account titles for each investment, such as ••Investment in HAL Corporation Common Stock."
Instructions

(a) Prepare journal entries lo record the transactions.

(b) Post to the investment accounts. (Use T accounts.)

(c) Prepare the adjusting entry at December 31, 2007 to report the portfolio at fair value.

(d) Show the balance sheet presentation at December 31. 2007.

Transcribed Image Text:

1,000 shares of Abel Corporation common stock 1,400 shares of HAL Corporation common stock 1.200 shares of Reese Corporation preferred stock Cost $52.000 84,000 33.600