During 2007, The Dontfalemy Company purchased shares of the outstanding common stock of the following companies; (i) ABC Co. for $2,100,000; (ii) ABD, Inc. for $3,720,000, (iii) ABE Co. for $2,570,000; and (iv) the ABF Corporation for $3,360,000.

Dontfalemy acquired 2% of ABDs outstanding shares because it expected that ABD stocks market value would increase rapidly within the next few months and that Dontfalemy would be able to realize a quick profit on the investment. Likewise, Dontfalemy purchased 10%of ABCs stock and 8% of ABEs stock because those companies are expected to pay high dividends and increase steadily in market value over the coming years. Dontfalemys acquisition of 30% of ABFs shares resulted in its owning the largest single concentration of stock held by any of ABFs stockholders.

At December 31, 2007, Dontfalemy had the follow data for the companies in which it had invested:

Company Companys Net Income Total Market Value of Companys Stock

ABC $ 864,000 $ 26,500,000

ABD 1,210,000 179,500,000

ABE 922,000 35,500,000

ABF 2,300,000 12,200,000

Assuming that Dontfalemy maintains separate ledger control accounts for trading, held for sale, and equity-basis investments, what journal entries did Dontfalemy make with regard to its investments at December 31, 2007?

The Dontfalemy Company

Journal Entries

12/31/07 Valuation allowance Investment in ABC Corp 550,000

Valuation allowance Investment in ABE Co. 270,000

Unrealized holding gain on securities

held available for sale 820,000

Unrealized holding loss on securities held for

trading purposes 130,000

Valuation allowance Investment in

ABD, Inc. 130,000

Investment in ABF Corporation (2,300,000*30%) 690,000

Earnings from subsidiary 690,000