The beginning balance sheet of Picadilly Incorporated included:

\[ \text { Investments in Affiliates ............... } \$ 6,344,000 \]

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The company completed the following investment transactions during the year:

Mar 2 Purchased 2,000 shares of common stock as a trading investment, paying \(\$ 12\) 1/4 per share. 5 Purchased new long-term investment in affiliate at cost of \(\$ 540,000\).

Apr. 21 Received semiannual cash dividend of \(\$ 0.75\) per share on the trading investment purchased March 2.

May 17 Received cash dividend of \(\$ 47,000\) from affiliated company.

July 16 Sold the trading investment (purchased on March 2) for \(\$ 101 / 8\) per share. Adjusted the entire investment to current market value and then recorded the sale.

Oct. 8 Purchased trading investments in stock for \(\$ 136,000\).

17 Received cash dividend of \(\$ 49,000\) from affiliated company.

Dec. 31 Received annual reports from affiliated companies. Their total net income for the year was \(\$ 550,000\). Of this amount, Picadilly's proportion is 22 percent.

The market value of trading investments is \(\$ 142,000\).

\section*{Required}
1. Record the transactions in the general journal of Picadilly Incorporated.
2. Post entries to the Investments in Affiliates T-account, and determine its balance at December 31. Do likewise for the Trading Investments T-account.
3. Show how to report the Trading Investments and the Investments in Affiliates at December 31 .
Preparing a consolidated balance sheet (Obj. 3)
Preparing a consolidated balance sheet (Obj. 3)