ACCOUNTING FOR SHORT-TERM INVESTMENTS. Williams Corporation acquired the following equity securities during 19x5 as short-term investments in conjunction with its cash management program:

200 shares of Southwestern Company capital stock ......... $14,600 500 shares of Montgomery Products capital stock .......... 14,500 During 19x5, Southwestern declared and paid a dividend of $1.20 per share, and Montgomery paid a dividend of $1.80 per share. At December 31, 19x5, the Southwestern stock has a market value of $75 per share, and the Montgomery stock has a market value of $25 per share. These are the only securities in Williams’ short-term portfolio at December 31, 19x5, and the allowance to adjust them to market has a preadjustment balance of zero.

REQUIRED:

1. Prepare Williams’ entries to record these two investments and the receipt of the dividends.

2. Calculate the market value of Williams’ short-term investment portfolio at December 31, 19x5.

3. Prepare the adjusting entry, if any, required for the investments at year-end.

4. How would the adjusting entry in requirement 3 above have appeared if the allowance to adjust short-term investments to market had a preadjustment debit balance of $740?