Exercise 17-11

Flint Corporation made the following cash purchases of securities during 2020, which is the first year in which Flint invested in securities.

1.		On January 15, purchased 11,400 shares of Sanchez Companys common stock at $33.50 per share plus commission $2,264.
2.		On April 1, purchased 5,700 shares of Vicario Co.s common stock at $52 per share plus commission $3,835.
3.		On September 10, purchased 7,980 shares of WTA Co.s preferred stock at $26.50 per share plus commission $5,594.

On May 20, 2020, Flint sold 4,332 shares of Sanchez Companys common stock at a market price of $35 per share less brokerage commissions, taxes, and fees of $4,389. The year-end fair values per share were Sanchez $30, Vicario $55, and WTA $28. In addition, the chief accountant of Flint told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases.

Flint Corporation made the following cash purchases of securities during 2020, which is the first year in which Flint invested in securities. 1. 2. 3. On January 15, purchased 11,400 shares of Sanchez Company's common stock at $33.50 per share plus commission $2,264. On April 1, purchased 5,700 shares of Vicario Co.'s common stock at $52 per share plus commission $3,835. On September 10, purchased 7,980 shares of WTA Co.'s preferred stock at $26.50 per share plus commission $5,594. On May 20, 2020, Flint sold 4,332 shares of Sanchez Company's common stock at a market price of $35 per share less brokerage commissions, taxes, and fees of $4,389. The year-end fair values per share were Sanchez $30, Vicario $55, and WTA $28. In addition, the chief accountant of Flint told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases. Your answer is correct. Prepare the journal entries to record the above three security purchases. (Round answers to o decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Date Account Titles and Explanation Debit Credit (1) TJan. 15, 2020 Equity Investments estments 384164 Cash cash 384164 (2) TApr. 1, 2020 Equity Investments 300235 57 Cash 300235 Compute the unrealized gains or losses. (Round answer to o decimal places, e.g. 2,500.) Unrealized Losses 6500 Prepare the adjusting entries for Flint on December 31, 2020. (Round answers to o decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Debit Credit Date Account Titles and Explanation Dec. 31, 2020 Unreal Unrealized Holding Gain or 6500 Fair Value Adjustment Fair value Adjustment 2 6500