Problem 16-5A

The following securities are in Frederick Companys portfolio of long-term available-for-sale securities at December 31, 2017.

Cost

1,400 shares of Willhite Corporation common stock $70,000

1,300 shares of Hutcherson Corporation common stock 81,900

1,400 shares of Downing Corporation preferred stock 36,400

On December 31, 2017, the total cost of the portfolio equaled total fair value. Frederick had the following transactions related to the securities during 2018.

Jan. 20: Sold all 1,400 shares of Willhite Corporation common stock at $53 per share.

28 Purchased 410 shares of $70 par value common stock of Liggett Corporation at $78 per share.

30 Received a cash dividend of $1.45 per share on Hutcherson Corp. common stock.

Feb. 8 Received cash dividends of $0.50 per share on Downing Corp. preferred stock.

18 Sold all 1,400 shares of Downing Corp. preferred stock at $25 per share.

July 30 Received a cash dividend of $1.00 per share on Hutcherson Corp. common stock.

Sept. 6 Purchased an additional 970 shares of $15 par value common stock of Liggett Corporation at $82 per share.

Dec. 1 Received a cash dividend of $1.50 per share on Liggett Corporation common stock.

At December 31, 2018, the fair values of the securities were:

Hutcherson Corporation common stock $67 per share

Liggett Corporation common stock $72 per share

Prepare journal entries to record the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date Account Titles and Explanation Debit Credit

Feb. 18

Post to the investment accounts. (Use T-accounts.) (Post entries in the order of journal entries presented in the previous part.)

Stock Investments

Prepare the adjusting entry at December 31, 2018 to report the portfolio at fair value. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date Account Titles and Explanation Debit Credit

Show the balance sheet presentation at December 31, 2018, for the investment-related accounts.

Frederick Company

Balance Sheet (Partial)

$

xxxxx

:

$ xxxxx