Question
Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following selected transactions relate to investments acquired by Rios Co.,
Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following selected transactions relate to investments acquired by Rios Co., which has a fiscal year ending on December 31:
20Y2
Feb. 1 Purchased 8,500 shares of Caldwell Inc. common stock at $52 per share plus a brokerage commission of $110. Caldwell has 108,000 shares of common stock outstanding.
May 1 Purchased securities of Holland Inc. as a trading investment for $125,000.
July 1 Sold 4,000 shares of Caldwell Inc. for $43 a share less a $100 brokerage commission.
31 Received an annual dividend of $0.70 per share on 4,500 shares of Caldwell Inc. stock.
Nov. 15 Sold the remaining shares of Caldwell Inc. for $50 per share less a $75 brokerage commission.
Dec. 31 The trading securities of Holland Inc. have a fair value on December 31 of $120,000.
20Y3
Apr. 1 Purchased securities of Fuller Inc. as a trading investment for $115,000.
Oct. 14 Sold securities of Fuller Inc. that cost $15,000 for $18,000.
Dec. 31 The fair values of the Holland Inc. and Fuller Inc. securities are as follows:
Issuing Company Cost Fair Value
Holland Inc. $125,000 $135,500
Fuller Inc. 100,000 118,000
- Journalize the entries to record the preceding transactions, including any December 31 adjusting entries.
- Prepare the Trading Investments section of the December 31, 20Y3 balance sheet for Rios Co.
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