The Wellington Company You are working for The Wellington Company on temporary assignment while one of the accountants is on family leave You have been asked to review the company: investment journal entries and provide necessary information to the accountant preparing the fnancial statements. PAGE JOURNAL ACCOUNTING EQUATION DATE POSTARE CREDIT ASSETS LIABILITIES EQU DEBIT 37.400.00 1 1 DESCRIPTION lan 17 Investments Red Rock Ca. Stock Canh Feb. 5 Investments-Sunset Village Bonds Interest Receivable 37,400.00 . 34,000.00 1 29000 1 34,290.00 ! 25,500.00 1 23 Investiments-Mays and Co. Stock Cash 25.500,00 Mar 31 Cash 540.00 The Wellington Company Investments Financial Statements and Valuation 340.00 The Wellington Company Mar 31 Cash Interest Receivable Interest Revenue 290.00 10 50.00 1 11 Apr. 6 Investment in Minions Corp. Stock 170,000.00 Cash 170,000.00 13 30 Cash 750.00 T 14 Dividend Revenue 750.00 Jul 1 Cash 18,162.00 10 Loss on Sale of investment 2,445.00 11 Interest Revenue 210.00 11 20,400.00 investments-Sunset Village Bonds Aug 14 Cash - 41,500.00 1 20 Gain on Sate of investments 1,800.00 39,500.00 Investments Harding Construction Stock 27 Cash 3,400.00 The Wellington Company Investments Financial Statements and Valuation The Wellington Company 3,400.00 25 3,400.00 1 24 29,000,00 1 25 3,500.00 26 25,500.00 1 27 130.00 + 28 27 Cash Investment in Minions Corp, Stock Sep,22 Cash Gain on Sale of Investments Investments-Mays and Co. Stock 30 Cash Interest Revenue Nov. 1 Investment in Minions Corp, Stock Income of Minions Corp Dec. 31 Unrealized Loss on Available For Sale Investments Valuation Allowance for Available For Sale Investments 31 Valuation Allowance for Trading Investments Unrealized Gain on Trading Investments 130.00 20 15,300.00 1 30 15,500.00 31 3,275.00 12 3,275.00 4 33 2,150.00 14 2.150.00 Investments 1. Which item is likely to be a trading security? Mays and Co. Why? Because it was sold quickly 2. How are brokerage commission fees treated on stock sales vs stock purchases? They are deducted from cash received or included in the stock cost 3. Based on these journal entries, what is the company's investment in Sunset Village bonds at the end of the year? 4. The journal entry on Aug 27 most likely shows Dividend af Minions Corp. stock. 5. As an investment, bonds are always categorized as none of these answers. 6 What is the company's investment in Minions Corp at the end of the year? $181,900 $13,600 7. Which of the following investments are likely to be available-for-sale securities? Check all that apply Sunset Village bonds Cannot be determined Red Rock Co stock Harding Construction stock Mays and Costock Minions Corp, stock The accountant preparing the financial statements has asked you to provide the fair value as of the end of the year for the investments. Present the information as it would be shown on the financial statements. Last year. The Wellington Company reported costs of $68,000 in trading Investments and $82,000 available-for-sale investments Prefer to the journal entries shown on the Welington Company panel Assume that all investments sold during this year were trading investments and that purchases during the year were new investments 1. Select the correct label for each line and her in the amount in classifying the investments, choose a categorization which seems most ikely, given the pattern of transactions in the journal entries. Enter all amounts as positive numbers. If an amount box does not require an entry leave it blank Trading Securities $ Available-For Sale Securities Available For Sale Securities 2. Where on the balance sheet do trading securities appear? 3. Where is the gain or loss from the change in value of available for sale securities reported in the financial statements? 4 Where are told to maturity Securities reported? Based on the journal entries for this year, does the company have any held-to-maturity securities? 5. Where are securities held for strategic reasons reported in the financial statements when using the equity method? Based on the journal entries for this year, does The Wellington Company have any autysecrets? 6. Which of the following items does not affect net income? Check all that apply Both gains and losses of any sort for all investments 5. Where are securities held for strategic reasons reported in the financial statements when using the equity method? Based on the journal entries for this year, does The Wellington Company have any equity securities? 6. Which of the following items does not affect net income? Check all that apply Both gains and losses of any sort for all investments Realized gain on trading securities Untealized gain on available-for-sale securities None of these answers in correct Only unrealized gains or losses for all investments Realized loss on available for sale securities Unrealized loss on trading securities