Question
P12-2B In January 2017, the management of Izmir A.S. concludes that it has suffi cient cash to purchase some short-term investments in debt and share
P12-2B In January 2017, the management of Izmir A.S. concludes that it has suffi cient
cash to purchase some short-term investments in debt and share securities. During the
year, the following transactions occurred.
Feb. 1 Purchased 500 ordinary shares of Joy for 30,800.
Mar. 1 Purchased 600 ordinary shares of Aurelius for 20,300.
Apr. 1 Purchased 40 1,000, 9% Sikich bonds for 40,000. Interest is payable annually
on October 1.
July 1 Received a cash dividend of 0.60 per share on the Joy ordinary shares.
Aug. 1 Sold 300 ordinary shares of Joy at 69 per share.
Sept. 1 Received a 1 per share cash dividend on the Aurelius ordinary shares.
Oct. 1 Received the interest on the Sikich bonds.
Oct. 1 Sold the Sikich bonds for 44,000.
At December 31, the fair value of the Joy ordinary shares was 66 per share. The fair value
of the Aurelius ordinary shares was 29 per share.
Instructions
(a) Journalize the transactions and post to the accounts Debt Investments and Share
Investments. (Use the T-account form.)
(b) Prepare the adjusting entry at December 31, 2017, to report the investments at fair
value. All securities are considered to be trading securities.
(c) Show the statement of fi nancial position presentation of investment securities at
December 31, 2017.
(d) Identify the income statement accounts and give the statement classifi cation of each
account.
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