Questone Incorrect Mark 0.00 out of 4.00 P Rag question Adjust EVA at Sale and Year End On November 1 of Year 1, Drucker Co acquired the following investments in equity securities measured at FV-NI. Kelly Corporation 500 shares of common stock (no par) at $60 per share Keefe Corporation 300 shares preferred stock (510 pan at 520 per share On December 31, the company's year end, the quoted market prices were as follows: Kelly Corporation common stock, $52, and Keefe Corporation preferred stock, $24. Following are the data for the following year (Year 2). Mar. 02: Dividends per share, declared and paid: Kelly Corp., S1, and Keefe Corp. 50.50. Oct. 01: Sold 100 shares of Keefe Corporation preferred stock at $25 per share. Dec. 31: Fair values: Kelly common, 546 per share, Keefe preferred, 526 per share. Year 1 Year 2 a. Prepare the entry for Drucker Company to record the purchase of the securities, b. Prepare any adjusting entry needed at December 31, Year 1. Note: If a journal entry isn't required for the transaction, select "N/A--Debit" and "N/A-Credit" as the account names and leave the Dr. and Cr. answers blank (zero). Date Nov. 1. Year 1 Debit 36.000 Account Name Investment in AFS Securities Cash To record purchase of securities Credit OX 30.000 x 0 Dec 31. Year 6.000 Ox 6.000 X To record adjusting entry c. Indicate the items and amounts that should be reported on the Year 1 income statement of Drucker and its year-end balance sheet. Assume that the investments are classified as current. Note: Use a negative sign to indicate a loss. Year 1 Income Statement Other Revenues and Gains Net gain (loss) on equity securities s OX Following are the data for the following year (Year 2) Mar. 02: Dividends per share, declared and paid Kelly Corp., 51, and Keefe Corp. 50.50. Oct. 01: Sold 100 shares of Keefe Corporation preferred stock at $25 per share. Dec. 31: Fair values: Kelly common 546 per share, Keefe preferred, $26 per share. Year 1 Year 2 a. Prepare the entry for Drucker Company to record the purchase of the securities b. Prepare any adjusting entry needed at December 31, Year 1. Note: If a journal entry isn't required for the transaction, select "N/A---Debit" and "N/A--Credit" as the account names and leave the Dr. and Cr.answers blank (rero). Date Nov. 1. Year 1 Account Name Investment in AFS Securities Cash To record purchase of securities Debit 36.000 0 Credit OX 30.000 X Dec 31, Year 1 6.000 0 6000 x To record adjusting entry c. Indicate the items and amounts that should be reported on the Year 1 income statement of Drucker and its year-end balance sheet. Assume that the investments are classified as current Note: Use a negative sign to indicate a loss. Year 1 OX Income Statement Other Revenues and Gains Net gain (loss) on equity securities 5 Balance Sheet. Dec. 31. Year 1 Assets Investment in equity securities 5 OX Check Tel 2 d. Prepare the entries required in Year 2 to record dividend revenue, the sale of stock, and the fair value adjustment Update the Fair Value Adjustment account prior to recording any sale. Eliminate the associated Fair Value Adjustment account upon recording the sale of any investment. Date Mar. 2. Year 2 Account Name Dr. Cr. OX 0 OX To record dividends received Oct. 1. Year 2 0 0 x OX To adjust investment to be sold to fair value Oct. 1. Year 2 0 X
