Question 1

Barry, Hank, and Babe form a company named Long Ball Investments, hoping to find that elusive home run stock. A new clothing company by the name of Major League Apparel has caught their eye. Major League Apparel has two classes of stock authorized: 5%, $10 par preferred and $1 par value common. Long Ball Investments has the following transactions during the year. None of the investments are large enough to exert a significant influence.

January		2		Purchase 1,500 shares of Major League common stock for $79 per share.
February		14		Purchase 600 shares of Major League preferred stock for $12.90 per share.
May		15		Sell 300 shares of Major Leagues common stock for $71 per share.
December		30		Receive a cash dividend on Major Leagues common stock of $0.31 per share and preferred stock of $0.41 per share.
December		31		The fair values of the common and preferred shares are $82.90 and $15.80, respectively.

Required:

1. Record each of these investment transactions. (Hint: Preferred stock transactions are recorded like common stock transactions, but preferred stock has no voting rights and therefore ownership provides no influence.) (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

1. Record the purchase of common stock.

Date	General Journal	Debit	Credit
January 02	Investments
	Cash

2. Record the purchase of preferred stock.

Date	General Journal	Debit	Credit
February 14

3. Record the sale of common stock.

Date	General Journal	Debit	Credit
May 15

4. Record the receipt of cash dividends.

Date	General Journal	Debit	Credit
December 30

5. Record adjusting entry of common stock investments to fair value.

Date	General Journal	Debit	Credit
December 31

6. Record adjusting entry of preferred stock investments to fair value.

Date	General Journal	Debit	Credit
December 31

Question 2

2. Calculate the balance in the Investments account as of December 31.

	Investments account