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PROBLEM 4-3 (RECORDING INVESTMENT AND VALUING DEBT & EQUITY INVESTMENTS) At the beginning of the year of 2020, the management of GOLD.CO concludes that it
PROBLEM 4-3 (RECORDING INVESTMENT AND VALUING DEBT & EQUITY INVESTMENTS) At the beginning of the year of 2020, the management of GOLD.CO concludes that it has sufficient cash to permit some short-term investments in debt and share securities with 10% to 15%. During the year, the following transactions occurred are as followed. Jan 1 Purchased 400 ordinary shares of DIAMOND Co. for $24,000. Feb 5 Purchased 550 ordinary shares of GLOW for $44.000. June 1 Purchased at face value $1,000,000 of BLUE Corp 10 years, 8% bonds. Interest is payable semiannually on June 1 and December 1. Aug 9 Received a cash dividend of $1,5 per share on DIAMOND Co. ordinary shares. Sold 150 ordinary shares of DIAMOND Co. at 574 Nov 8 Received a cash dividend of $1,8 per share on GLOW ordinary shares. Dec 1 Sold $450,000 the BLUE Corp bonds at 95. Received the semiannual interest on BLUE Corp. bonds. Sept 6 Dec 1 At December 31, the fair value of DIAMOND. Co ordinary shares was $80 per share. The fair value of GLOW ordinary shares was $100 per share. Instructions a. Journalize the transactions and post to the accounts Debt investment and share investment. (Use the T- account form). b. Prepare the adjusting entry at Dec 31, 2020, to report the investment securities at fair value. All securities are considered to be trading securities
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