Question
In January 2020, the management of AXL Company concludes that it has sufficient cash to permit some short-term investments in debt and share securities. During
In January 2020, the management of AXL Company concludes that it has sufficient cash to permit some short-term investments in debt and share securities. During the year, the following transactions occurred.
Feb. 1 Purchased 600 ordinary shares of Golden One for $32,400.
Mar. 1 Purchased 800 ordinary shares of Giordano for $20,400.
Apr. 1 Purchased 50 $1,000, 7% Falcon bonds for $50,000. Interest is payable semi-annually on October 1 and April 1.
July 1 Received a cash dividend of 0.60 per share on the Golden One ordinary shares.
Aug. 1 Sold 200 ordinary shares of Golden One at $57 per share.
Sept. 1 Received a $1 per share cash dividend on the Giordano ordinary shares.
Oct. 1 Received the interest on the Falcon bonds.
Oct. 1 Sold the Falcon bonds for $49,000.
At December 31, the fair value of the Golden One ordinary shares was $55 per share. The fair value of the Giordano ordinary shares was $24 per share.
Instructions:
- Journalize the transactions and post it to the accounts Debt Investments and Share Investments (Use the T-account form).
- Prepare the adjusting entry at December 31, 2020, to report the investment securities at fair value. All securities are considered as trading securities.
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