Exercise E-6 Effect of marketable investment securities transactions on financial statements

The following transactions pertain to Harrison Imports for Year 1:

1. Started business by acquiring $28,000 cash from the issue of common stock.
2. Provided $74,600 of services for cash.
3. Invested $36,500 in marketable investment securities.
4. Paid $27,550 of operating expense.
5. Received $750 of investment income from the securities.
6. Invested an additional $12,000 in marketable investment securities.
7. Paid a $1,600 cash dividend to the stockholders.
8. Sold investment securities that cost $9,525 for $12,700.
9. Received another $1,200 in investment income.
10. Determined the market value of the investment securities at the end of the year was $35,425.

Record the events in T-accounts.

(a) Held-to-Maturity

(b) Trading

(c) Available-for-Sale

(a) Held-to-Maturity Cash Investment Securities Beg. Bal. 1. Beg. Bal. 3. 36,500 12,000 2. 6. 28,000 74,600 750 12,700 1,200 36,500 3. 27,550 4. 12,000 6. 1,600 7. 5. 8. 12,700 8. End. Bal. 35,800 9. End. Bal. 39,600 Common Stock Dividends Beg. Bal. Beg. Bal. 1. 28,000 1,600 7. End. Bal. 28,000 End. Bal. 1,600 Service Revenue Investment Income Beg. Bal. Beg. Bal. 2. 74,000 8. 1,500 End. Bal. 74,000 End. Bal. 1,500 Gain on Sale of Invest. Operating Expenses Beg. Bal. Beg. Bal. 8. 3,175 27,550 4. End. Bal. 3,175 End. Bal. 27,550 b) Trading Cash Investment Securities Beg. Bal. Beg. Bal. End. Bal. End. Bal. Common Stock Dividends Beg. Bal. Beg. Bal. End. Bal. End. Bal. Service Revenue Investment Income Beg. Bal. Beg. Bal. 2. 74,600 End. Bal. 74,600 End. Bal. Gain on Sale of Invest. Operating Expenses Beg. Bal. Beg. Bal. 27,550 4. End. Bal. End. Bal. 27,550 (Income Statement Account) Unrealized Gain/Loss Beg. Bal. End. Bal. (c) Available-for-Sale Cash Investment Securities Beg. Bal. Beg. Bal. End. Bal. End. Bal. Common Stock Dividends Beg. Bal. Beg. Bal. End. Bal. End. Bal. Accum. Other Comp. Income Unrealized Gain/Loss Service Revenue Beg. Bal. Beg. Bal. 2. 74,600 End. Bal. End. Bal. 74,600 Investment Income Gain on Sale of Invest. Beg. Bal. Beg. Bal. End. Bal. End. Bal. Operating Expenses Beg. Bal. 27,550 4. End. Bal. 27,550