On December 31, 2006 Marsh Company held 1,000 shares of X Company common stock in its portfolio
Question:
On December 31, 2006 Marsh Company held 1,000 shares of X Company common stock in its portfolio of long-term investments in available-for-sale securities. The stock had cost $15 per share and has a current market value of $13 per share. The December 31, 2006 balance sheet showed the following:
Assets
Long-term investment in available-for-sale securities ... $15,000
Less: Allowance for change in value of investment .......... (2,000)
$13,000
Stockholders’ Equity
Unrealized decrease in value of available-for-sale securities $ . (2,000)
During 2007 the company acquired as long-term investments 900 shares of Y Company common stock for $18 per share and 800 shares of Z Company common stock for $22 per share. At the end of 2007 the respective market values per share were:
X—$14, Y—$17, and Z—$20.
Required
Record the purchase of the investments in 2007 and the adjusting entry on December 31, 2007, and show the respective December 31, 2007 balance sheet accounts.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
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... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones