Problem 15-2A Recording, adjusting, and reporting short-term available-for-sale securities LO P3

[The following information applies to the questions displayed below.]

Rose Company had no short-term investments prior to year 2015. It had the following transactions involving short-term investments in available-for-sale securities during 2015.

Apr.	16		Purchased 6,000 shares of Gem Co. stock at $20.25 per share plus a $380 brokerage fee.
May	1		Paid $150,000 to buy 13-week U.S. Treasury bills (debt securities): $150,000 principal amount, 4% interest, securities dated May 1.
July	7		Purchased 3,000 shares of PepsiCo stock at $51.00 per share plus a $350 brokerage fee.
	20		Purchased 1,500 shares of Xerox stock at $19.00 per share plus a $430 brokerage fee.
Aug.	3		Received a check for principal and accrued interest on the U.S. Treasury bills that matured on July 31.
	15		Received a(n) $1.00 per share cash dividend on the Gem Co. stock.
	28		Sold 3,000 shares of Gem Co. stock at $27.00 per share less a $470 brokerage fee.
Oct.	1		Received a $1.80 per share cash dividend on the PepsiCo shares.
Dec.	15		Received a $1.15 per share cash dividend on the remaining Gem Co. shares.
	31		Received a $1.20 per share cash dividend on the PepsiCo shares.

Problem 15-2A Part 1

Required:

1.

Prepare journal entries to record the preceding transactions and events. 1. Purchased 6,000 shares of Gem Co. stock at $20.25 per share plus a $380 brokerage fee. 2. Paid $150,000 to buy 13-week U.S. Treasury bills (debt securities): $150,000 principal amount, 4% interest, securities dated May 1. 3. Purchased 3,000 shares of PepsiCo stock at $51.00 per share plus a $350 brokerage fee. 4. Purchased 1,500 shares of Xerox stock at $19.00 per share plus a $430 brokerage fee. 5. Received a check for principal and accrued interest on the U.S. Treasury bills that matured on July 29. 6. Received an $1.00 per share cash dividend on the Gem Co. stock. 7. Sold 3,000 shares of Gem Co. stock at $27.00 per share less a $470 brokerage fee. 8. Received a $1.80 per share cash dividend on the PepsiCo shares. 9. Received a $1.15 per share cash dividend on the remaining Gem Co. shares. 10. Received a $1.20 per share cash dividend on the PepsiCo shares.

Problem 15-2A Part 2

2.	Prepare a table to compare the year-end cost and fair values of Rose's short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $22.50; PepsiCo, $48.25; and Xerox, $16.00.

Problem 15-2A Part 3

3.	Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in available-for-sale securities. 1. Record the year-end adjusting entry for the securities portfolio as of December 31, 2015.