During January 2011, Pareto Glass Company purchased the following securities as its long-term securities available for sale investment portfolio:

D Corporation Common Stock: 11,400 shares (96,600 outstanding) at $9 per share

F Corporation Bonds: $319,000 (10-year, 8 percent) purchased at par (not to be held to maturity)

Subsequent to acquisition, the following data were available:

	2011			2012
Net income reported at December 31:
D Corporation	$	42,000		$	52,000
F Corporation	$	377,000		$	570,000
Dividends and interest paid during the year:
D Corporation common stock dividends (per share)	$	0.50		$	0.60
F Corporation bonds interest	$	25,520		$	25,520
Fair value at December 31:
D Corporation common stock (per share)	$	8.00		$	9.50
F Corporation bonds	$	280,000		$	290,000

1.

Required information

Required:
1.	What accounting method should be used for the investment in D common stock? F bonds?

	Accounting method
D common stock	(Click to select)Equity methodFair value method
F bonds	(Click to select)Fair value methodEquity method

Check my work

2.

Required information

2a.	Prepare the journal entries for the company for each year to record purchase of the investments. (Leave no cells blank; if there is no entry is required select "No journal entry required" from the dropdown and enter "0". Omit the "$" sign in your response.)

	General Journal	Debit	Credit
2011	(Click to select)Investments in SASNo journal entry requiredInterest revenueDividend revenueCashEquity in affiliate earningsInvestments in affiliatesNet unrealized losses/gains
	(Click to select)Investments in SASNo journal entry requiredNet unrealized losses/gainsCashInterest revenueDividend revenueInvestments in affiliatesEquity in affiliate earnings
2012	(Click to select)Dividend revenueInvestments in SASNo journal entry requiredInterest revenueCashNet unrealized losses/gainsInvestments in affiliatesEquity in affiliate earnings
	(Click to select)Investments in SAS,CashInvestments in affiliatesInterest revenueNo journal entry requiredDividend revenueEquity in affiliate earningsNet unrealized losses/gains

2b.	Prepare the journal entries for the company for each year to record income reported by D and F Corporations. (Leave no cells blank; if there is no entry is required select "No journal entry required" from the dropdown and enter "0". Omit the "$" sign in your response.)

	General Journal	Debit	Credit
2011	(Click to select)Interest revenueCashInvestments in SASInvestments in affiliatesNet unrealized losses/gainsEquity in affiliate earningsNo journal entry requiredDividend revenue
	(Click to select)No journal entry requiredCashInvestments in affiliatesInterest revenueNet unrealized losses/gainsEquity in affiliate earningsInvestments in SASDividend revenue
2012	(Click to select)Dividend revenueInterest revenueInvestments in affiliatesEquity in affiliate earningsNo journal entry requiredCashInvestments in SASNet unrealized losses/gains
	(Click to select)Net unrealized losses/gainsDividend revenueInterest revenueEquity in affiliate earningsCashInvestments in affiliatesNo journal entry requiredInvestments in SAS

2c.	Prepare the journal entries for the company for each year to record dividends and interest received from D and F Corporations. (Leave no cells blank; if there is no entry is required select "No journal entry required" from the dropdown and enter "0". Omit the "$" sign in your response.)

	General Journal	Debit	Credit
2011	(Click to select)Investments in affiliatesDividend revenueNet unrealized losses/gainsCashInterest revenueNo journal entry requiredInvestments in SASEquity in affiliate earnings
	(Click to select)Net unrealized losses/gainsInvestments in SASInvestments in affiliatesCashNo journal entry requiredDividend revenueEquity in affiliate earningsInterest revenue
	(Click to select)Net unrealized losses/gainsCashEquity in affiliate earningsDividend revenueInterest revenueInvestments in affiliatesInvestments in SASNo journal entry required
2012	(Click to select)No journal entry requiredCashInvestments in SASDividend revenueInterest revenueEquity in affiliate earningsInvestments in affiliatesNet unrealized losses/gains
	(Click to select)Interest revenueNet unrealized losses/gainsCashEquity in affiliate earningsInvestments in SASNo journal entry requiredInvestments in affiliatesDividend revenue
	(Click to select)Dividend revenueEquity in affiliate earningsNo journal entry requiredInterest revenueCashNet unrealized losses/gainsInvestments in SASInvestments in affiliates

2d.	Prepare the journal entries for the company for each year to record fair value effects at year-end. (Leave no cells blank; if there is no entry is required select "No journal entry required" from the dropdown and enter "0". Omit the "$" sign in your response.)

	General Journal	Debit	Credit
2011	(Click to select)CashNo journal entry requiredInterest revenueNet unrealized losses/gainsInvestments in affiliatesEquity in affiliate earningsDividend revenueInvestments in SAS
	(Click to select)Dividend revenueInvestments in SASNet unrealized losses/gainsNo journal entry requiredEquity in affiliate earningsInterest revenueCashInvestments in affiliates
2012	(Click to select)Dividend revenueNet unrealized losses/gainsInvestments in affiliatesNo journal entry requiredCashEquity in affiliate earningsInterest revenueInvestments in SAS
	(Click to select)No journal entry requiredCashDividend revenueNet unrealized losses/gainsInterest revenueEquity in affiliate earningsInvestments in affiliatesInvestments in SAS

Check my work

3.

Required information

3.	For each year, show how the following items and their amounts should be reported on the financial statements: (Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)

		2011
	Balance Sheet:
a.	Long-term Investments:
	(Click to select)Investments in SAS (at fair value)Interest revenueDividend revenueNet unrealized losses/gainsEquity in affiliate earnings	$
b.	Stockholders' Equity:
	(Click to select)Investments in SAS (at fair value)Net unrealized losses/gainsDividend revenueEquity in affiliate earningsInterest revenue
	Income Statement:
c.	Revenues:
	(Click to select)Net unrealized losses/gainsInvestments in SAS (at fair value)Equity in affiliate earningsInterest revenueDividend revenue
	(Click to select)Dividend revenueEquity in affiliate earningsInterest revenueInvestments in SAS (at fair value)Net unrealized losses/gains

		2012
	Balance Sheet:
a.	Long-term Investments:
	(Click to select)Investments in SAS (at fair value)Interest revenueEquity in affiliate earningsNet unrealized losses/gainsDividend revenue	$
b.	Stockholders' Equity:
	(Click to select)Net unrealized losses/gainsInterest revenueInvestments in SAS (at fair value)Equity in affiliate earningsDividend revenue
	Income Statement:
c.	Revenues:
	(Click to select)Equity in affiliate earningsDividend revenueInvestments in SAS (at fair value)Interest revenueNet unrealized losses/gains
	(Click to select)Equity in affiliate earningsDividend revenueInvestments in SAS (at fair value)Net unrealized losses/gainsInterest revenue