# In January 2010, the management of Noble Company concludes that it has sufficient cash to permit some

## Question:

In January 2010, the management of Noble Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred.

Feb. 1 Purchased 600 shares of Hiens common stock for $31,800, plus brokerage fees of$600.

Mar. 1 Purchased 800 shares of Pryce common stock for $20,000, plus brokerage fees of$400.

Apr. 1 Purchased 50 $1,000, 7% Roy bonds for$50,000, plus $1,000 brokerage fees. Interest is payable semiannually on April 1 and October 1. July 1 Received a cash dividend of$0.60 per share on the Hiens common stock.

Aug. 1 Sold 200 shares of Hiens common stock at $58 per share less brokerage fees of$200.

Sept. 1 Received a $1 per share cash dividend on the Pryce common stock. Oct. 1 Received the semiannual interest on the Roy bonds. Oct. 1 Sold the Roy bonds for$50,000 less $1,000 brokerage fees. At December 31, the fair value of the Hiens common stock was$55 per share. The fair value of the Pryce common stock was \$24 per share.

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, 2010, to report the investment securities at fair value. All securities are considered to be trading securities.

(c) Show the balance sheet presentation of investment securities at December 31, 2010.

(d) Identify the income statement accounts and give the statement classification of each account.

Common Stock
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...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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