In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit some

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In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and share securities. During the year, the following transactions occurred.
Feb. 1 Purchased 600 ordinary shares of Superior for $32,400.
Mar. 1 Purchased 800 ordinary shares of Pawlik for $20,400.
Apr. 1 Purchased 50 $1,000, 7% Venice bonds for $50,000. Interest is payable semiannually on April 1 and October 1.
July 1 Received a cash dividend of $0.60 per share on the Superior ordinary shares. 

Aug. 1 Sold 200 ordinary shares of Superior at $57 per share.
Sept. 1 Received a $1 per share cash dividend on the Pawlik ordinary shares.
Oct. 1 Received the semiannual interest on the Venice bonds.
Oct. 1 Sold the Venice bonds for $49,000.
At December 31, the fair value of the Superior ordinary shares was $55 per share. The fair value of the Pawlik ordinary shares was $24 per share.


Instructions
(a) Journalize the transactions and post to the accounts Debt Investments and Share Investments. (Use the T-account form.)
(b) Prepare the adjusting entry at December 31, 2014, to report the investment securities at fair value. All securities are considered to be trading securities.
(c) Show the statement of financial position presentation of investment securities at December 31, 2014.
(d) Identify the income statement accounts and give the statement classification of each account.

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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Financial Accounting IFRS

ISBN: 978-1118285909

2nd edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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