Kenseth Company has the following securities in its portfolio on December 31, 2017. None of these investments are accounted for under the equity method.

Investments	Cost	Fair Value
1,500 shares of Gordon, Inc., common	$ 73,500	$ 69,000
5,000 shares of Wallace Corp., common	180,000	175,000
400 shares of Martin, Inc., preferred	60,000	61,600
	$313,500	$305,600

All of the securities were purchased in 2017.

In 2018, Kenseth completed the following securities transactions.

March 1	Sold the 1,500 shares of Gordon, Inc., common, @ $45 less fees of $1,200
April 1	Bought 700 shares of Earnhart Corp., common, @ $75 plus fees of $1,300

Kenseth's portfolio of equity securities appeared as follows on December 31, 2018.

Investments	Cost	Fair Value
5,000 shares of Wallace Corp., common	$180,000	$175,000
700 shares of Earnhart Corp., common	53,800	50,400
400 shares of Martin, Inc., preferred	60,000	58,000
	$293,800	$283,400

Instructions

Prepare the general journal entries for Kenseth Company for:

(a) The 2017 adjusting entry.

(b) The sale of the Gordon stock.

(c) The purchase of the Earnhart stock.

(d) The 2018 adjusting entry for the portfolio.

Answer rating: 100% (QA)

Solution Prepare general journal entries for K company in the manner given below ... View the full answer