TommyBoy Products had no investment in available-for-sale securities at January 1, 2010. During 2010, TommyBoy engaged in
Question:
TommyBoy Products had no investment in available-for-sale securities at January 1, 2010. During 2010, TommyBoy engaged in the following marketable security transactions:
a. Purchased 200 shares of Silver Company stock for $12 per share.
b. Purchased 300 shares of Gold Corporation stock for $16 per share.
c. Received a $1-per-share dividend on the Silver stock.
d. Sold 125 shares of the Silver stock for $13.50 per share.
At the end of 2010, the Silver stock had a market value of $13 per share, and the Gold stock had a market value of $14.50 per share.
Required:
1. Prepare journal entries for each of the four transactions assuming they are classified as available-for-sale securities.
2. If necessary, prepare a journal entry to recognize the December 31, 2010, market values. What is the income statement effect of this entry?
3. How would these investments be reported on the December 31, 2009, balance sheet?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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...
Step by Step Answer:
1 a InvestmentsAvailableforSale Securities 2400 Cash 2400 200 shares 12 per share b InvestmentsAvailableforSale Securities 4800 Cash 4800 300 shares 16 per share c Cash 200 Dividend Income 200 200 shares 1 ...View the full answer
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger
