Question

Brown Package Corporation generated excess cash and invested in securities, as follows:
2014 Jul. 2 Purchased 3,300 shares of TJF, Inc. common stock at $ 13.00 per share. Brown holds the stock in its active trading account and plans to sell the stock within three months, when the company will need the cash for normal operations.
Aug. 21 Received a cash dividend of $ 0.50 per share on the TJF stock investment.
Sep. 16 Sold the TJF stock for $ 13.80 per share.
Oct. 8 Purchased 500 shares of Seanco stock at $ 15.00 per share. The stock is held in the active trading account as Brown plans to hold the Seanco stock for less than five months.
Dec. 31 Seanco stock’s current market price is $ 16.00 per share.

Requirements
1. Classify each of the investments made during 2014. (Assume the investments represent less than 20% of ownership of outstanding voting stock.)
2. Journalize the 2014 transactions. Explanations are not required.
3. Prepare T-accounts for the investment assets and show how to report the investments on Brown’s balance sheet at December 31, 2014.



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  • CreatedJanuary 16, 2015
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