Question
On December 31, 2017, Turnball Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of
On December 31, 2017, Turnball Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee.
Common Stock | Shares | Cost | ||
Gehring Co. | 1,900 | $53,200 | ||
Wooderson Co. | 5,000 | 40,000 | ||
Kitselton Co. | 1,800 | 39,600 |
On December 31, 2017, the total fair value of the securities was equal to its cost. In 2018, the following transactions occurred.
Aug. | 1 | Received $0.50 per share cash dividend on Gehring Co. common stock. | |
Sept. | 1 | Sold 1,500 shares of Wooderson Co. common stock for cash at $7 per share. | |
Oct. | 1 | Sold 760 shares of Gehring Co. common stock for cash at $31 per share. | |
Nov. | 1 | Received $1 per share cash dividend on Kitselton Co. common stock. | |
Dec. | 15 | Received $0.50 per share cash dividend on Gehring Co. common stock. | |
Dec. | 31 | Received $1 per share annual cash dividend on Wooderson Co. common stock. |
At December 31, the fair values per share of the common stocks were: Gehring Co. $30, Wooderson Co. $7, and Kitselton Co. $20.
Instructions
1. Journalize the 2018 transactions and post to the account Stock Investments. (Use the T-account form.)
2. Prepare the adjusting entry at December 31, 2018, to show the securities at fair value. The stock should be classified as available-for-sale securities.
3. Show the balance sheet presentation of the investments at December 31, 2018. At this date, Turnball Associates has common stock $1,562,000 and retained earnings $1,076,000.
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