Problem #1: Darden Restaurant

In January the management of Darden Restaurant concludes that it has sufficient cash to purchase some short-term investments in debt and stock securities. During the year, these transactions occurred:

Feb 1:Purchased 800 shares of California Pizza common stock for $41,800.

Date	Account	Debit	Credit

Mar 1: Purchased 550 shares of Burger King common stock for $20,300.

Date	Account	Debit	Credit

April 1: Purchased 75, $1,000, 12% McDonalds bonds for $76,200. Interest is payable semiannually on April 1 and October 1.

Date	Account	Debit	Credit

July 1: Received a cash dividend of $.50 per share on the California Pizza common stock.

Date	Account	Debit	Credit

Aug 1:Sold 200 shares of California Pizza common stock at $43 per share.

Date	Account	Debit	Credit

Sept 1: Received $1 per share cash dividend on the Burger King common stock.

Date	Account	Debit	Credit

Oct 1:Received the semiannual interest on the McDonalds bonds.

Date	Account	Debit	Credit

Oct 1:Sold the McDonalds bonds for $72,000.

Date	Account	Debit	Credit

b. Prepare the adjusting entry at December 31, to report the investments at fair value. All securities are considered to be trading securities. FMV are California Pizza ($40) and Burger King ($32).

Security	Cost	Fair Value
California Pizza stock
Burger King stock
Total

Journal entry to record the investments at fair market value.

Date	Account	Debit	Credit