Question
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
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 companys investment journal entries and provide necessary information to the accountant preparing the financial statements.
PAGE 8
JOURNAL
ACCOUNTING EQUATION
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
| 1 | Jan. 17 | Investments-Red Rock Co. Stock |
| 40,700.00 |
| ? |
|
|
| 2 |
| Cash |
|
| 40,700.00 | ? |
|
|
| 3 | Feb. 5 | Investments-Sunset Village Bonds |
| 37,000.00 |
| ? |
|
|
| 4 |
| Interest Receivable |
| 320.00 |
| ? |
|
|
| 5 |
| Cash |
|
| 37,320.00 | ? |
|
|
| 6 | 23 | Investments-Mays and Co. Stock |
| 27,750.00 |
| ? |
|
|
| 7 |
| Cash |
|
| 27,750.00 | ? |
|
|
| 8 | Mar. 31 | Cash |
| 370.00 |
| ? |
|
|
| 9 |
| Interest Receivable |
|
| 320.00 | ? |
|
|
| 10 |
| Interest Revenue |
|
| 50.00 |
|
| ? |
| 11 | Apr. 6 | Investment in Minions Corp. Stock |
| 185,000.00 |
| ? |
|
|
| 12 |
| Cash |
|
| 185,000.00 | ? |
|
|
| 13 | 30 | Cash |
| 800.00 |
| ? |
|
|
| 14 |
| Dividend Revenue |
|
| 800.00 |
|
| ? |
| 15 | Jul. 1 | Cash |
| 19,746.00 |
| ? |
|
|
| 16 |
| Loss on Sale of Investment |
| 2,664.00 |
|
|
| ? |
| 17 |
| Interest Revenue |
|
| 210.00 |
|
| ? |
| 18 |
| Investments-Sunset Village Bonds |
|
| 22,200.00 | ? |
|
|
| 19 | Aug. 14 | Cash |
| 41,200.00 |
| ? |
|
|
| 20 |
| Gain on Sale of Investments |
|
| 1,800.00 |
|
| ? |
| 21 |
| Investments-Harding Construction Stock |
|
| 39,400.00 | ? |
|
|
| 22 | 27 | Cash |
| 3,700.00 |
| ? |
|
|
| 23 |
| Investment in Minions Corp. Stock |
|
| 3,700.00 | ? |
|
|
| 24 | Sep. 22 | Cash |
| 31,250.00 |
| ? |
|
|
| 25 |
| Gain on Sale of Investments |
|
| 3,500.00 |
|
| ? |
| 26 |
| Investments-Mays and Co. Stock |
|
| 27,750.00 | ? |
|
|
| 27 | 30 | Cash |
| 160.00 |
| ? |
|
|
| 28 |
| Interest Revenue |
|
| 160.00 |
|
| ? |
| 29 | Nov. 1 | Investment in Minions Corp. Stock |
| 22,200.00 |
| ? |
|
|
| 30 |
| Income of Minions Corp. |
|
| 22,200.00 |
|
| ? |
| 31 | Dec. 31 | Unrealized Loss on Available-For-Sale Investments |
| 3,275.00 |
|
|
| ? |
| 32 |
| Valuation Allowance for Available-For-Sale Investments |
|
| 3,275.00 | ? |
|
|
| 33 | 31 | Valuation Allowance for Trading Investments |
| 2,150.00 |
| ? |
|
|
| 34 |
| Unrealized Gain on Trading Investments |
|
| 2,150.00 |
|
| ? |
Review the journal entries on The Wellington Company panel then answer the following questions.
1- Based on these journal entries, what is the companys investment in Sunset Village bonds at the end of the year?
2- What is the companys investment in Minions Corp. at the end of the year?
3- 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 in available-for-sale investments. Refer to the journal entries shown on The Wellington Company panel. Assume that all investments sold during this year were trading investments and that purchases during the year were new investments.
a- Select the correct label for each line and fill in the amount. In classifying the investments, choose a categorization which seems most likely, 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 | ||
|
|
| |
|
|
| |
|
|
| |
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