Question

Mr. T’s Fashions, once a direct competitor to Italian Stallion’s clothing line, has formed a friendship in recent years leading to a small investment (less than 5%) by Mr. T in the common stock of Italian Stallion. Mr. T’s engages in the following transactions relating to its investment.
February 1 Purchases 150 shares of Italian Stallion common stock for $ 16 per share.
June 15 Sells 50 shares of Italian Stallion stock for $ 14 per share.
October 31 Receives a cash dividend of $ 0.50 per share.
December 31 The fair value of Italian Stallion’s stock is $ 12 per share.

Required:
1. Record each of these transactions, including an adjustment on December 31 for the investment’s fair value, if appropriate.
2. Calculate the balance of the Investments account on December 31.



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  • CreatedJuly 15, 2014
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