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Rose Company had no short-term investments prior to this year. It had the following transactions this year involving short-term stock investments with insignificant influence. April
Rose Company had no short-term investments prior to this year. It had the following transactions this year involving short-term stock investments with insignificant influence. April 16 Purchased 3,500 shares of Gem Company stock at $24 per share. July 7 Purchased 2,000 shares of PepsiCo stock at $49 per share. July 20 Purchased 1,000 shares of Xerox stock at $16 per share. August 15 Received a $1.00 per share cash dividend on the Gem Company stock. August 28 Sold 2,000 shares of Gem Company stock at $30 per share. October 1 Received a $2.50 per share cash dividend on the PepsiCo shares. December 15 Received a $1.00 per share cash dividend on the remaining Gem Company shares. December 31 Received a $1.50 per share cash dividend on the PepsiCo shares. The year-end fair values per share are Gem Company, $26; PepsiCo, $46; and Xerox, $13. 1 Answer is complete and correct. No Date December 31 General Journal Unrealized loss - Income Fair value adjustment - Stock Debit Credit 6,000 6,000 2. Prepare a table to compare the year-end cost and fair values of Rose's short-term stock investments. Answer is complete and correct. Comparison of Cost and Fair Values for Stock Investments Portfolio at Year-End Gem Company PepsiCo Xerox Total Cost Fair Value Unrealized Amount Gain or Loss? $ 36,000 $ 39,000 98,000 92,000 16,000 13,000 $ 150,000 $144,000 $ (6,000) Unrealized loss 4. Prepare the current asset section of the balance sheet for the fair value adjustment for Rose's short-term investments. (Amounts to be deducted should be entered with a minus sign.) Current Assets Stock investments (as cost) Fair value adjustment-Stock Stock investments (at fair value) 5. Identify the dollar increase or decrease from Rose's short-term stock investments on (a) its income statement for this year and (b) the equity section of its balance sheet at this year-end. (a) Income statement for this year (b) The equity section of its balance sheet at this year-end
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