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P12-3A Journalize transactions and adjusting entry for stock investments. On December 31, 2015, Turnball Associates owned the following securities, held as a long-term investment. The
P12-3A Journalize transactions and adjusting entry for stock investments. | |||||||
On December 31, 2015, 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. | 2,000 | $60,000 | |||||
Wooderson Co. | 5,000 | 45,000 | |||||
Kitselton Co. | 1,500 | 30,000 | |||||
On December 31, 2015, the total fair value of the securities was equal to its cost. In 2016, | |||||||
the following transactions occurred. | |||||||
July 1 | Received $1 per share semiannual cash dividend on Wooderson Co. common stock. | ||||||
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 $8 per share. | ||||||
Oct. 1 | Sold 800 shares of Gehring Co. common stock for cash at $33 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 semiannual 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 2016 transactions and post to the account Stock Investments. (Post in | |||||||
T-account form.) | |||||||
(b) Prepare the adjusting entry at December 31, 2016, 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 investment-related accounts at December 31, | |||||||
2016. At this date, Turnball Associates has common stock $1,500,000 and retained | |||||||
earnings $1,000,000. | |||||||
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . | |||||||
(a) | 2016 | ||||||
July 1 | Account | Value | |||||
Account | Value | ||||||
Aug 1 | Account | Value | |||||
Account | Value | ||||||
Sept. 1 | Account | Value | |||||
Account | Value | ||||||
Account | Value | ||||||
Oct.1 | Account | Value | |||||
Account | Value | ||||||
Account | Value | ||||||
Nov. 1 | Account | Value | |||||
Account | Value | ||||||
Dec. 15 | Account | Value | |||||
Account | Value | ||||||
Dec. 31 | Account | Value | |||||
Account | Value | ||||||
Stock Investments | |||||||
2016 | 2016 | ||||||
Jan. 1 Balance | Value | Sept. 1 | Value | ||||
Oct. 1 | Value | ||||||
2016 | |||||||
Dec. 31 Balance | Value | ||||||
(b) | Dec.31 | Account | Value | ||||
Account | Value | ||||||
Security | Cost | Fair Value | |||||
Gehring Co. | Value | Value | |||||
Wooderson Co. | Value | Value | |||||
Kitselton Co. | Value | Value | |||||
? | ? | ||||||
(c) | Investments | ||||||
Investments in stock of less than 20% | |||||||
owned companies, at fair value | Value | ||||||
Stockholders' equity | |||||||
Common stock | Value | ||||||
Retained earnings | Value | ||||||
Total paid-in capital and retained earnings | ? | ||||||
Less: Unrealized loss on available-for-sale securities | Value | ||||||
Total stockholders' equity | ? | ||||||
After you have completed P12-3A, consider the additional question. | |||||||
1. | Assume that number of shares of Wooderson Co. sold changed to 2,000 shares. | ||||||
Show impact on the journal entries and presentation in balance sheet. | |||||||
Please make it typed. |
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