Reporting of and Analyzing Financial Effects of Passive Equity Securities

Guay Company had the following transactions and adjustment related to a passive equity investment.

2019
Nov. 15	Purchased 5,000 shares of Core, Inc.'s common stock at $16 per share plus a brokerage commission of $900. Guay Company expects to sell the stock in the near future.
Dec. 22	Received a cash dividend of $1.25 per share of common stock from Core.
Dec. 31	Made the adjusting entry to reflect year-end fair value of the stock investment in Core. The year-end market price of the Core common stock is $17.50 per share.
2020
Jan. 20	Sold all 5,000 shares of the Core common stock for $86,400.

Required a. Prepare journal entries to record these transactions.

General Journal
Date	Description	Debit	Credit
2019
11/15	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer
	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer
12/22	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer
	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer
12/31	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer
	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer
2020
1/20	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer
	Loss on Sale of Investment	Answer	Answer
	AnswerCashInvestment in Core, Inc.Dividend IncomeUnrealized GainUnrealized LossGain on Sale of InvestmentLoss on Sale of Investment	Answer	Answer

b. Post the journal entries from a to their respective T-accounts.

Cash (A)
11/15/19	Answer	Answer
12/22/19	Answer	Answer
12/31/19	Answer	Answer
1/20/20	Answer	Answer

Investment in Core, Inc. (A)
11/15/19	Answer	Answer
12/22/19	Answer	Answer
12/31/19	Answer	Answer
1/20/20	Answer	Answer

Loss on Sale of Investment (E)
11/15/19	Answer	Answer
12/22/19	Answer	Answer
12/31/19	Answer	Answer
1/20/20	Answer	Answer

Unrealized Gain (R)
11/15/19	Answer	Answer
12/22/19	Answer	Answer
12/31/19	Answer	Answer
1/20/20	Answer	Answer

Dividend Income (R)
11/15/19	Answer	Answer
12/22/19	Answer	Answer
12/31/19	Answer	Answer
1/20/20	Answer	Answer

c. Record each of the transactions in the financial statement effects template.

Balance Sheet	Income Statement
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital		Revenues	-	Expenses	=	Net Income
11/15Purchase 5,000 shares of Core, Inc. common	Answer	+	Answer	=	Answer	+	Answer	+	Answer		Answer	-	Answer	=	Answer
12/22Dividend income	Answer	+	Answer	=	Answer	+	Answer	+	Answer		Answer	-	Answer	=	Answer
12/31 Increase in investment	Answer	+	Answer	=	Answer	+	Answer	+	Answer		Answer	-	Answer	=	Answer
1/20Sale of Core, Inc. common	Answer	+	Answer	=	Answer	+	Answer	+	Answer		Answer	-	Answer	=	Answer