Question
Barry, Hank, and Babe form a company named Long Ball Investments, hoping to find that elusive home run stock. A new clothing company by the
Barry, Hank, and Babe form a company named Long Ball Investments, hoping to find that elusive home run stock. A new clothing company by the name of Major League Apparel has caught their eye. Major League Apparel has two classes of stock authorized: 5%, $10 par preferred and $1 par value common. Long Ball Investments has the following transactions during the year. None of the investments are large enough to exert a significant influence.
January | 2 | Purchase 1,500 shares of Major League common stock for $79 per share. | ||
February | 14 | Purchase 600 shares of Major League preferred stock for $12.90 per share. | ||
May | 15 | Sell 300 shares of Major Leagues common stock for $71 per share. | ||
December | 30 | Receive a cash dividend on Major Leagues common stock of $0.31 per share and preferred stock of $0.41 per share. | ||
December | 31 | The fair values of the common and preferred shares are $82.90 and $15.80, respectively. |
Required:
1. Record each of these investment transactions. (Hint: Preferred stock transactions are recorded like common stock transactions, but preferred stock has no voting rights and therefore ownership provides no influence.) (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
1. Record the purchase of common stock.
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2. Record the purchase of preferred stock.
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3. Record the sale of common stock.
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4. Record the receipt of cash dividends.
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5. Record adjusting entry of common stock investments to fair value.
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6. Record adjusting entry of preferred stock investments to fair value.
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2. Calculate the balance in the Investments account as of December 31.
Investments account |
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