K& Z Potato Chip Company, a U. S. GAP reporter, provides you with the following information regarding its investments in equity securities during the current year.
Date Description January
1 (Beginning Balance: No entry required) K& Z is currently holding 8,500 Faithful Corporation common shares in its available-for- sale portfolio. The Faithful shares cost $ 20 per share. There is a debit balance of $ 17,000 in the fair value adjustment account.
January 23 K& Z purchased 1,700 shares of Lawrence Company common stock for $ 155 per share. K& Z is holding these shares for trading purposes.
February 4 K& Z acquired 136,000 of the 340,000 outstanding shares of Zombie, Inc. for a total cost of $ 1,020,000.
March 23 Faithful Corporation paid a $ 3.40 per share cash dividend.
June 30 Zombie, Inc. reported $ 1,850,000 in net income for the year. Zombie also declared and paid a cash dividend of $ 2.55 per share.
October 15 K& Z purchased 340 bonds of the Pierre Nardo Group ( PNG) at $ 1,000 par and intends to hold the investment to maturity.
December 31 Accrued interest on the PNG bonds amounted to $ 42,500.
December 31 The year- end market values of the Faithful Corporation and Lawrence shares are $ 30.60 and $ 170 per share, respectively. The PNG bonds were trading at $ 1,700 at the end of the current period and Zombie was trading at $ 10 per share.
Required
Prepare all journal entries necessary to record K& Z’s investment transactions for the year. Show all computations.