(APPENDIX) INVESTMENTS IN TRADING SECURITIES Maxwell Company engaged in the following transactions involving short-term investments: a. Purchased...

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(APPENDIX) INVESTMENTS IN TRADING SECURITIES Maxwell Company engaged in the following transactions involving short-term investments:

a. Purchased 200 shares of Bartco stock for $12,800.

b. Received a $1.60-per-share dividend on the Bartco stock.

c. Sold 40 shares of the Bartco stock for $61 per share.

d. Purchased 380 shares of Newton stock for $20,900.

e. Received a dividend of $1.00 per share on the Newton stock.

At December 31, the Bartco stock has a market value of $60 per share, and the Newton stock has a market value of $59 per share.

Required:

. Prepare entries for Maxwell’s journal to record these transactions assuming they are trading securities.

. Calculate the market value of Maxwell’s short-term investment portfolio at December 31.

. Provide the necessary adjusting entry at December 31.

. What is the income statement effect of the adjusting entry?

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

Problem Set B

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Cornerstones Of Financial Accounting Current Trends Update

ISBN: 9781111527952

1st Edition

Authors: Jay Rich , Jeff Jones, Maryanne Mowen , Don Hansen

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