On November 1, 2020, Drucker Co. acquired the following investments in equity securities measured at FV-NI. Kelly Corporation400 shares of common stock (no-par) at $60 per share. Keefe Corporation240 shares preferred stock ($10 par) at $20 per share. On December 31, 2020, the company's year-end, the quoted market prices were as follows: Kelly Corporation common stock, $52, and Keefe Corporation preferred stock, $24. Following are the data for 2021. Mar. 2. 2021 Dividends per share, declared and paid: Kelly Corp., $1, and Keefe Corp., $0.50. Oct. 1, 2021 Sold 80 shares of Keefe Corporation preferred stock at $25 per share. Dec. 31, 2021 Fair values: Kelly common, $46 per share, Keefe preferred, $26 per share. Journal Entries and Financial Statement Presentation for 2020 Journal Entries and Financial Statement Presentation for 2021 Account Name a. Prepare the entry for Drucker Company to record the purchase of the securities. Date Dr. Cr. Nov. 1, 2020 Investment in Stock 28,800 Cash 28,800 0 0 Date Dr. Cr. b. Prepare any adjusting entry needed at December 31, 2020. Account Name Dec. 31, 2020 Fair Value Adjustment--AFS Investment in TS 0X 0 X C. Indicate the items and amounts that should be reported on the 2020 income statement of Drucker and its year-end balance sheet. Assume that the investments are classified as current. Note: Use a negative sign to indicate a loss. Income Statement 2020 Other Revenues and Gains Net gain (loss) on equity securities $ 520 x 2020 Balance Sheet, December 31 Assets Investment in equity securities $ 22,560 x Journal Entries and Financial Statement Presentation for 2020 Journal Entries and Financial Statement Presentation for 2021 Date Cr. Cash . > 520 520 Cash 0 X 0 0 X d. Prepare the entries required in 2021 to record dividend revenue, the sale of stock, and the fair value adjustment. Update the Fair Value Ac Note: List multiple debits or credits (when applicable) in alphabetical order. Account Name Dr. Mar. 2, 2021 Dividend Revenue Oct. 1, 2021 2,400 x Investment in TS To adjust to fair value, investment to be sold. Oct. 1, 2021 2,000 Gain on Sale of Investment Investment in Stock To record sale of securities Dec 31, 2021 Unrealized Gain or Loss--Income 2,400 x Fair Value Adjustment--AFS 2,400 x Cash X 0 400 0 1,600 > > 0 0 > e. Indicate items and amounts that should be reported on the 2021 income statement and year-end balance sheet. Note: Use a negative sign to indicate a loss. Income Statement 2021 Other Revenues and Gains Dividend revenue 184,000 x Net gain (loss) on equity securities $ 0 x $ 2021 Balance Sheet, December 31 Assets Investment in equity securities $ 4,160 x On November 1, 2020, Drucker Co. acquired the following investments in equity securities measured at FV-NI. Kelly Corporation400 shares of common stock (no-par) at $60 per share. Keefe Corporation240 shares preferred stock ($10 par) at $20 per share. On December 31, 2020, the company's year-end, the quoted market prices were as follows: Kelly Corporation common stock, $52, and Keefe Corporation preferred stock, $24. Following are the data for 2021. Mar. 2. 2021 Dividends per share, declared and paid: Kelly Corp., $1, and Keefe Corp., $0.50. Oct. 1, 2021 Sold 80 shares of Keefe Corporation preferred stock at $25 per share. Dec. 31, 2021 Fair values: Kelly common, $46 per share, Keefe preferred, $26 per share. Journal Entries and Financial Statement Presentation for 2020 Journal Entries and Financial Statement Presentation for 2021 Account Name a. Prepare the entry for Drucker Company to record the purchase of the securities. Date Dr. Cr. Nov. 1, 2020 Investment in Stock 28,800 Cash 28,800 0 0 Date Dr. Cr. b. Prepare any adjusting entry needed at December 31, 2020. Account Name Dec. 31, 2020 Fair Value Adjustment--AFS Investment in TS 0X 0 X C. Indicate the items and amounts that should be reported on the 2020 income statement of Drucker and its year-end balance sheet. Assume that the investments are classified as current. Note: Use a negative sign to indicate a loss. Income Statement 2020 Other Revenues and Gains Net gain (loss) on equity securities $ 520 x 2020 Balance Sheet, December 31 Assets Investment in equity securities $ 22,560 x Journal Entries and Financial Statement Presentation for 2020 Journal Entries and Financial Statement Presentation for 2021 Date Cr. Cash . > 520 520 Cash 0 X 0 0 X d. Prepare the entries required in 2021 to record dividend revenue, the sale of stock, and the fair value adjustment. Update the Fair Value Ac Note: List multiple debits or credits (when applicable) in alphabetical order. Account Name Dr. Mar. 2, 2021 Dividend Revenue Oct. 1, 2021 2,400 x Investment in TS To adjust to fair value, investment to be sold. Oct. 1, 2021 2,000 Gain on Sale of Investment Investment in Stock To record sale of securities Dec 31, 2021 Unrealized Gain or Loss--Income 2,400 x Fair Value Adjustment--AFS 2,400 x Cash X 0 400 0 1,600 > > 0 0 > e. Indicate items and amounts that should be reported on the 2021 income statement and year-end balance sheet. Note: Use a negative sign to indicate a loss. Income Statement 2021 Other Revenues and Gains Dividend revenue 184,000 x Net gain (loss) on equity securities $ 0 x $ 2021 Balance Sheet, December 31 Assets Investment in equity securities $ 4,160 x
