The balance sheet of Northern Developments Corp. at the start of the year included these balances:

Assume the company completed the following investment transactions during 2020:

Mar. 3 Purchased 8,000 common shares as a short-term investment, paying $25.00 per share plus brokerage commission of $500.

4 Purchased additional shares in a company that is significantly influenced by Northern Developments Corp. at a cost of $600,000 plus brokerage commission of $4,500.

May 14 Received semi-annual cash dividend of $1.70 per share on the short-term investment purchased March 3.

Jun. 15 Received cash dividend of $55,000 from a significantly influenced company.

Aug. 28 Sold the short-term investment (purchased on March 3) for $24.00 per share, less brokerage commission of $500.

Oct. 24 Purchased other short-term investments for $275,000, plus brokerage commission of $400.

Dec. 15 Received cash dividend of $30,000 from a significantly influenced company.

31 Received annual reports from significantly influenced companies. Their total net income for the year was $1,300,000. Of this amount, Northern Developments Corp.’s proportion is 30 percent.

Required

1. Record the transactions in the general journal of Northern Developments Corp.

2. Post entries to the Investments in Significantly Influenced and Other Companies T-account, and determine its balance at December 31, 2020.

3. Post entries to the Short-Term Investments T-account and determine its balance at December 31, 2020.

4. Assuming the market value of the short-term investment portfolio is $510,000 at December 31, 2020, show how Northern Developments Corp. would report short-term investments and investments in significantly influenced and other companies on the December 31, 2020, balance sheet. Use the following format:

Transcribed Image Text:

Current assets Cash $XXX Short-term investments, at fair value Accounts receivable (net) XXX Total current assets XXX Investments in significantly influenced and other companies