Question

In January 2014, the management of Weast Company concludes that it has sufficient cash to purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred.
Feb. 1 Purchased 1,200 shares of ALF common stock for $51,600.
Mar. 1 Purchased 500 shares of LNC common stock for $18,500.
Apr 1 Purchased 70 $1,000, 8% CRT bonds for $70,000. Interest is payable semiannually on April 1 and October 1.
July 1 Received a cash dividend of $0.80 per share on the ALF common stock.
Aug. 1 Sold 200 shares of ALF common stock at $42 per share.
Sept. 1 Received $2 per share cash dividend on the LNC common stock.
Oct. 1 Received the semiannual interest on the CRT bonds.
Oct. 1 Sold the CRT bonds for $75,700.
At December 31, the fair values of the ALF and LNC common stocks were $39 and $30 per share, respectively.
Instructions
(a) Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.)
(b) Prepare the adjusting entry at December 31, 2014, to report the investments at fair value. All securities are considered to be trading securities.
(c) Show the balance sheet presentation of investment securities at December 31, 2014.
(d) Identify the income statement accounts and give the statement classification of each account.



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  • CreatedApril 07, 2014
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