Emmitt, Walter, and Barry form a company named Long Run Investments, with the intention of investing in stocks with great long- run potential. A clothing company named National League Gear looks like a great investment prospect. National League Gear has two classes of stock authorized: 6%, $ 30 par preferred and $ 5 par value common. Long Run Investments has the following transactions during the year. None of the investments are large enough to exert a significant influence.
February 2 Purchases 1,500 shares of National League Gear’s common stock for $ 35 per share.
February 4 Purchases 600 shares of National League Gear’s preferred stock for $ 32 per share.
July 15 Sells 400 shares of National League Gear’s common stock for $ 40 per share.
November 30 Receives a cash dividend on National League Gear’s common stock of $ 1.10 per share and preferred stock of $ 1.80 per share.
December 31 The fair value of the common and preferred shares equal $ 31 and $ 30, respectively.
1. Record each of these investment transactions.
2. Calculate the balance in the Investments account as of December 31.