On December 31, 2012, Ogallala Associates owned the following securities, held as a long-term investment. The securities
Question:
On December 31, 2012, Ogallala Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee.
Common Stock | Shares | Cost | |
Carlene Co. | 2,000 | $60,000 | |
Riverdale Co. | 5,200 | 41,600 | |
Raczynski Co. | 1,620 | 34,020 |
On December 31, 2012, the total fair value of the securities was equal to its cost. In 2013, the following transactions occurred.
July 1 | Received $1 per share semiannual cash dividend on Riverdale Co. common stock. | |
Aug. 1 | Received $0.4 per share cash dividend on Carlene Co. common stock. | |
Sept. 1 | Sold 1,560 shares of Riverdale Co. common stock for cash at $7 per share, less brokerage fees of $320. | |
Oct. 1 | Sold 800 shares of Carlene Co. common stock for cash at $32 per share, less brokerage fees of $470. | |
Nov. 1 | Received $1 per share cash dividend on Raczynski Co. common stock. | |
Dec. 15 | Received $0.4 per share cash dividend on Carlene Co. common stock. | |
Dec. 31 | Received $1 per share semiannual cash dividend on Riverdale Co. common stock. |
At December 31, the fair values per share of the common stocks were: Carlene Co. $33, Riverdale Co. $7, and Raczynski Co. $19.
(a) Journalize the 2012 transactions and post to the account Stock Investments. (Use the T-account form.)
(b) Prepare the adjusting entry at December 31, 2012, to show the securities at fair value. The stock should be classified as available-for-sale securities.
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso