In 2014, Quito Inc. purchased stock as follows: (a) Acquired 2,000 shares of Hollow Arts Corp....

 

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In 2014, Quito Inc. purchased stock as follows: (a) Acquired 2,000 shares of Hollow Arts Corp. common stock (par value $20) in ex- change for 1,200 shares of Quito Inc. preferred stock (par value $30). The preferred stock had a market value of $75 per share on the date of the exchange. (b) Purchased 800 shares of Marion Corp. common stock (par value $10) at $70 per share, plus a brokerage fee of $800. At December 31, 2014, the market values of the securities were as follows: Security Quito Inc. Hollow Arts Corp. Marion Corp. Market Value $71 41 72 The investments in common stock are classified by Quito Inc. as available-for-sale securities ac- counted for by the cost method. The fiscal year of Quito ends on December 31. (1) Prepare all entries relating to the investments in common stock for 2014. (2) Prepare the entry to record the sale of 200 shares of Marion Corp. common stock on January 15, 2015, at $74 per share. (3) Prepare the entry to reclassify the remaining 600 shares of Marion Corp. common stock from available-for-sale securities to trading securities on January 31, 2015. The stock was selling at $67 per share on that date. In 2014, Quito Inc. purchased stock as follows: (a) Acquired 2,000 shares of Hollow Arts Corp. common stock (par value $20) in ex- change for 1,200 shares of Quito Inc. preferred stock (par value $30). The preferred stock had a market value of $75 per share on the date of the exchange. (b) Purchased 800 shares of Marion Corp. common stock (par value $10) at $70 per share, plus a brokerage fee of $800. At December 31, 2014, the market values of the securities were as follows: Security Quito Inc. Hollow Arts Corp. Marion Corp. Market Value $71 41 72 The investments in common stock are classified by Quito Inc. as available-for-sale securities ac- counted for by the cost method. The fiscal year of Quito ends on December 31. (1) Prepare all entries relating to the investments in common stock for 2014. (2) Prepare the entry to record the sale of 200 shares of Marion Corp. common stock on January 15, 2015, at $74 per share. (3) Prepare the entry to reclassify the remaining 600 shares of Marion Corp. common stock from available-for-sale securities to trading securities on January 31, 2015. The stock was selling at $67 per share on that date.

Answer rating: 100% (QA)

1 AvailableforSale SecuritiesHollow Corp Stock 1200 75 Preferred Stock 1 200 X 30 PaidIn ... View the full answer