Question

Anderson Cabinets began operations during 2008. During the initial years of operations, the company invested primarily in fixed assets to promote growth. During 2014, H. Hurst, the company president, decided that the company was sufficiently stable that it could now invest in short-term marketable securities, classified as trading securities. During 2014, the company entered into the following transactions concerning marketable securities:
1. March 10 Purchased 1,000 shares of Arctic Oil & Gas for $28 per share.
2. March 31 Purchased 800 shares of Humphries Manufacturing for $10 per share.
3. May 26 Received a cash dividend of $1.25 per share from Arctic Oil & Gas.
4. July 10 Purchased 1,000 shares of Kingsman Game Co. for $18 per share.
5. September 11 Sold 800 shares of Arctic Oil & Gas for $35 per share.
6. September 27 Sold 500 shares of Humphries Manufacturing for $8 per share.
7. October 19 Purchased 1,000 shares of Quimby Inc. for $25 per share.
8. November 6 Received a cash dividend of $1.25 per share from Arctic Oil & Gas.
9. December 8 Sold the remaining shares of Arctic Oil & Gas and Humphries Manufacturing for $30 and $15, respectively.
10. December 31 According to the Wall Street Journal, the market values of these securities at the close of business on December 31 follow:
Arctic Oil & Gas ......... $32
Humphries Manufacturing ...... 14
Kingsman Game Company ...... 15
Quimby Inc. ........... 26

REQUIRED:
a. Prepare the necessary journal entries for each of these transactions. Assume that any dividends were declared and paid on the same day.
b. Prepare the short-term equity securities section of the balance sheet as of December 31, 2014.
c. Compute the impact of these transactions on the income statement for the year ended December 31, 2014.



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  • CreatedAugust 19, 2014
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