ACCOUNTING FOR SHORT-TERM INVESTMENTS. Windermere, Inc. began operations in January, 19x6. During the year, Windermere reported the following transactions in short-term investments:

REQUIRED:
1. Prepare the journal entries needed to record transactions a through d.
2. Prepare a schedule of Windermere, Inc.’s short-term investments in securities at December 31, 19x6, and show the corresponding cost and market value of each security.
3. Prepare the adjusting entry needed, if any, on December 31, 19x6, to establish the proper allowance to adjust short-term investments in securities to market value.
4, Show how short-term investments will be reported on Windermere’s December 31, 19x6, balance sheet.
5. What amounts related to short-term investments in securities will appear on Windermere’s 19x6 income statement? (Ignore income taxes.)

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a) On September 26, Windermere purchased the following shares of common stock: 2,000 shares of Hastings Inc. 1,000 shares of Barrington Inc. Total cost $46,000 30,000 $76,000 b) On October 1, Windermere purchased U.S. Treasury bills for $32,000. e) On November 5, Windermere sold 1,500 of its shares of Hastings Inc. for $39,000. d) On December 15, the following cash dividends were declared and paid: Hastings Inc. Barrington Inc. $1.20 per share 1.25 per share e) On December 31, 19x6, Hastings and Barrington common stock was selling at $20 per share and $31 per share, respectively, and the U.S. Treasury bills purchased on October 1 had a market value of $33,100.