Slip Systems had no short-term investments prior to this year. It had the following transactions this year involving short-term stock investments with insignificant influence.

Feb. 6. Purchased 3,400 shares of Nokia stock at $41 per share.

Apr. 7. Purchased 1,200 shares of Dell stock at $39 per share.

June 2. Purchased 2,500 shares of Merck stock at $72 per share.

30. Received a $1.00 per share cash dividend on the Nokia shares.

Aug. 11 Sold 850 shares of Nokia stock at $46 per share.

24. Received a $0.10 per share cash dividend on the Dell shares.

Nov. 9 Received a $1.50 per share cash dividend on the remaining Nokia shares.

Dec. 18 Received a $0.15 per share cash dividend on the Dell shares.

Required

1. Prepare journal entries to record the preceding transactions and events.

2. Prepare a table to compare the year-end cost and fair values of the short-term stock investments. The year-end fair values per share are Nokia, $40; Dell, $41; and Merck, $59.

3. Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term stock investments.

Analysis Component

4. Prepare the current asset section of the balance sheet for the fair value adjustment to Slip’s short-term investments.

5. Identify the dollar increase or decrease from Slip’s short-term stock investments on 

(a) Its income statement this year and 

(b) The equity section of its balance sheet at this year-end.