Question
On November 1 of Year 1, Drucker Co. acquired the following investments in equity securities measured at FV-NI. Kelly Corporation 800 shares of common
On November 1 of Year 1, Drucker Co. acquired the following investments in equity securities measured at FV-NI. Kelly Corporation 800 shares of common stock (no-par) at $60 per share Keefe Corporation 480 shares preferred stock ($10 par) at $20 per share On December 31, 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 the following year (Year 2). Mar. 02: Dividends per share, declared and paid: Kelly Corp., $1, and Keefe Corp., $0.50. Oct. 01: Sold 160 shares of Keefe Corporation preferred stock at $25 per share. Dec. 31: Fair values: Kelly common, $46 per share, Keefe preferred, $26 per share. Year 1 Year 2 d. Prepare the entries required in Year 2 to record dividend revenue, the sale of stock, and the fair value adjustment. Update the Fair Value Adjustment account prior to recording any sale. Eliminate the associated Fair Value Adjustment account upon recording the sale of any investment. Date Mar. 2. Year 2 Cash Account Name Dividend Revenue Dr. Cr. 1,040 O 1,040 To record dividends received. Oct. 1, Year 2 Fair Value Adjustment-Equity Securities v 160 O Unrealred Gain or Loss-Income 3 160 To asivat investment to be sold to fair value. Oct. 1, Year 2 Cash v 4,000 Fair Value Adjustment-Equity Securities v 0 800 v Investment in Stock o 3.200 To record sale of investment Dec. 31, Tear 2 Unrealized Gain or Loss-Income v 640 0 Fair Value Adjustment-Equity Secures To adust the VA account v D 640 x
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