In January 2012, the management of Gina 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 500 shares of Joy common stock for $30,000, plus brokerage fees of $800.
Mar. 1 Purchased 600 shares of Aurelius common stock for $20,000, plus brokerage fees of $300.
Apr. 1 Purchased 40 $1,000, 9% Sikich bonds for $40,000, plus $1,200 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 Joy common stock.
Aug. 1 Sold 300 shares of Joy common stock at $69 per share, less brokerage fees of $350.
Sept. 1 Received a $1 per share cash dividend on the Aurelius common stock.
Oct. 1 Received the semiannual interest on the Sikich bonds.
Oct. 1 Sold the Sikich bonds for $45,000, less $1,000 brokerage fees.
At December 31, the fair value of the Joy common stock was $66 per share. The fair value of the Aurelius common stock was $29 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, 2012, 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, 2012.
(d) Identify the income statement accounts and give the statement classification of each account.