Question 1

Presented below is information related to the purchases of common stock by Cheyenne Company during 2020.

		Cost (at purchase date)		Fair Value (at December 31)
Investment in Arroyo Company stock		$97,000		$76,000
Investment in Lee Corporation stock		266,000		311,000
Investment in Woods Inc. stock		176,000		185,000
Total		$539,000		$572,000

(Assume a zero balance for any Fair Value Adjustment account.)

(a)		What entry would Cheyenne make at December 31, 2020, to record the investment in Arroyo Company stock if it chooses to report this security using the fair value option?
(b)		What entry would Cheyenne make at December 31, 2020, to record the investments in the Lee and Woods corporations, assuming that Cheyenne did not select the fair value option for these investments?

(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.)