Daffitar Inc. produces and sells theater set designs and costumes. The company began operations on January 1, 2014. The following transactions relate to securities acquired by Daffitar Inc., which has a fiscal year ending on December 31:

2014

Feb. 1. Purchased 12,000 shares of Acuity Inc. as an available-for-sale security at $27 per share, including the brokerage commission.

Mar. 18. Received a cash dividend of $0.18 per share on Acuity Inc. stock.

Sept. 12. A cash dividend of $0.24 per share was received on the Acuity stock.

28. Sold 1,000 shares of Acuity Inc. stock at $21 per share, less a brokerage commission of $50.

Dec. 31. Acuity Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $33 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment.

2015

Jan. 23. Purchased an influential interest in Shouse Inc. for $376,000 by purchasing 70,000 shares directly from the estate of the founder of Shouse Inc. There are 250,000 shares of Shouse Inc. stock outstanding.

Mar. 16. Received a cash dividend of $0.24 per share on Acuity Inc. stock.

Sept. 16. Received a cash dividend of $0.24 per share plus an extra dividend of $0.06 per share on Acuity Inc. stock.

Dec. 31. Received $30,100 of cash dividends on Shouse Inc. stock. Shouse Inc. reported net income of $190,000 in 2015. Daffitar Inc. uses the equity method of accounting for its investment in Shouse Inc.

31. Acuity Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $30 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the decrease in fair value from $33 to $30 per share.

Instructions

1. Journalize the entries to record these transactions.

2. Prepare the investment-related asset and stockholders’ equity balance sheet presentation for Daffitar Inc. on December 31, 2015, assuming the Retained Earnings balance on December 31, 2015, is $465,000.