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

Gehring Co. Wooderson Co. Kitselton Co.

Shares

2,000 5,000 1,500

Cost

$60,000 45,000 30,000

On December 31, 2017, the total fair value of the securities was equal to its cost. In 2018, the following transactions occurred.

Aug. 1 Sept. 1 Oct. 1 Nov. 1 Dec. 15

31

Received $0.50 per share cash dividend on Gehring Co. common stock. Sold 1,500 shares of Wooderson Co. common stock for cash at $8 per share. Sold 800 shares of Gehring Co. common stock for cash at $33 per share. Received $1 per share cash dividend on Kitselton Co. common stock. Received $0.50 per share cash dividend on Gehring Co. common stock. 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. $32, Wooderson Co. $8, and Kitselton Co. $18.

Instructions

(a) Journalize the 2018 transactions and post to the account Stock Investments. (Use the T-account form.)

(b) 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.

(c) Show the balance sheet presentation of the investments at December 31, 2018. At this date, Turnball Associates has common stock $1,500,000 and retained earnings $1,000,000.