During the fourth quarter of 2014, Flyer, Inc., generated excess cash, which the company invested in trading
Question:
During the fourth quarter of 2014, Flyer, Inc., generated excess cash, which the company invested in trading securities as follows:
2014
Nov 16 Purchased 2,500 common shares as an investment in trading securities, paying $8 per share.
Received cash dividend of $0.23 per share on the trading securities. Dec 16
Dec 31 Adjusted the trading securities to fair value of $7 per share.2014
Requirements
1. Open T-accounts for Cash (including its beginning balance of $38,000), Investment in Trading Securities, Dividend Revenue, and Unrealized Gain (Loss) on Trading Securities.
2. Journalize the foregoing transactions and post to the T-accounts.
3. Show how to report the short-term investment on Flyer’s balance sheet at December 31, 2014.
4. Show how to report whatever should appear on Flyer’s income statement for the year ended December 31, 2014.
5. Flyer sold the trading securities for $19,850 on January 14, 2015. Journalize the sale.
6. Assume that the securities were classified as available-for-sale. Further, assume that the fair value was $10 per share on December 31, 2015, and $10.50 per share on January 1, 2016 when they were sold. Re-perform steps 3–4 for 2014 and 2015, and journalize the sale of the securities on January 1, 2016. Follow the example in Exhibit 5-2.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Financial Accounting
ISBN: 978-0133427530
10th edition
Authors: Walter Harrison, Charles Horngren, William Thomas