An investor purchased 100 shares of Mallard common stock at $20 per share on March 15 of Year 1. On December 31 of Year 1, the stock was quoted at $19 per share and Mallarddeclared and paid a dividend of $1.50 per share. On June 5 of Year 2, the investor sold all 100 shares for $22 per share. On December 31 of each year, the Fair Value Adjustment accountis adjusted. Assuming the investment is measured at FV-NI, provide the journal entries to be made at each of the following dates.a. March 15, Year 1.b. December 31, Year 1.c. June 5, Year 2.d. December 31, Year 2.Note: If a journal entry isn't required for the transaction, select "N/A—Debit" and "N/A―Credit" as the account names and leave the Dr. and Cr. answers blank (zero).DateAccount Name(a) Mar. 15, Year 1Investment in StockCash(b1) Dec. 31, Year 1(b2) Dec. 31, Year 1(c) June 5, Year 2To record investment purchase.CashDividend RevenueTo record dividends.Unrealized Gain or Loss-IncomeFair Value Adjustment-Equity SecuritiesTo adjust investment to fair value.CashInvestment in StockGain on Sale of InvestmentTo record sale of investment.N/A-DebitN/A-CreditTo adjust FVA account at year-end.(d) Dec. 31, Year 2DebitCredit2,000002,000>>>> >>>15000150100001002,200002,0000200000☑0 ☑

Journalizing is one of the most important and basic processes in the accounting cycle. Journalizing…

Answered: An investor purchased 100 shares of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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For several years Fister Links Products has held shares of Microsoft common stock, considered by the company to be securities available-for-sale. The shares were acquired at a cost of $500,000. Their fair value last year was $610,000 and is $670,000 this year. At what amount will the investment be reported in this year’s balance sheet? What adjusting entry is required to accomplish this objective?
Bonneau Company had the following transactions relating to investments in available-for-sale securities during the year. Prepare the required general journal entries for these transactions:July 4 Bonneau purchased 400 shares of Crossley Company stock at $120 per share plus a $400 brokerage fee. These stocks will be classified as Available-for-Sale securities.Sept 15 Bonneau received a $1.50 per share cash dividend on the Crossley Company stock.Dec 31 The fair value of the Crossley Company stock (the only investment that Bonneau owns) is $125 per share. The balance of the Fair value Adjustment—AFS account had a zero balance prior to adjustment.
Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on December 31, Year 1, was as follows: Please see the attachment for details: On June 12, Year 2, Hurricane purchased 1,450 shares of Rogue Wave Inc. at $45 per share plus a $100 brokerage commission.a. Provide the journal entries to record the following:1. The adjustment of the available-for-sale security portfolio to fair value on December 31, Year 1.2. The June 12, Year 2, purchase of Rogue Wave Inc. stock.b. How are unrealized gains and losses treated differently for available-for-sale securities than for trading securities?
On April 1, 2024, Sunland Company purchased 44,800 common shares in Ecotown Ltd. for $13 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $15 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles く Debit Credit
On April 1, 2024, Sheridan Company purchased 34,400 common shares in Ecotown Ltd. for $18 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $20 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries) Date 10 Account Titles Debit Credit
Harvard Co. purchased a trading investment on December 1 of the current year for $30,000. The market value of the stock investment at year-end is $36,000. What value will be reported in net income for the adjustment, if any? $36,000 $6,000 $6,000 $30,000
On July 1, 2021, JKJ Corporation purchased 100 common shares of JMK Ltd. at $20 per share. JKJ expected to be able to sell this investment within a year at $28 per share. Dividends of $1 per share were declared and paid on August 1, 2021. On December 31, 2021, the fair value of each share was $23. What balance was shown in the investment account on JKJ's balance sheet on December 31 (year end)? $2,300 $2,400 $2,000 $2,800
Concord Co. purchased 1,150 shares of Sugarland Company for $18 each this year and classified the investment as a trading security. Concord sold 270 shares of the stock for $21 each. At year end the price per share of the Sugarland Company had increased to $22.Prepare the journal entries for these transactions and any year-end adjustments. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record the purchase enter a debit amount enter a credit amount enter an account title to record the purchase enter a debit amount enter a credit amount (To record the purchase.) enter an account title to record the sale enter a debit amount enter a credit amount enter an account title to record the sale enter a debit amount enter a credit…
On February 1. Mini Company purchased 1.000 shares (2% ownership) of Win Company common stock for $30 per share. The shares are classified as a short-term investment. On March 20, Mini Company sold 200 shares of Win stock for $5,800. Mini received a dividend of $1 per share on April 25. The fair value of the remaining stock is $26,400 on June 30. The entry to record the appropriate fair value adjustment on June 30 would include a debit to O Urealzed Gain or Lass - Income in the amount of $2,400. 57 167 points O Fair Value Adjustment -Stock in the amount of $2.400. O Unrealized Gain or Loss -Income in the amount of $3,600. O No gain or loss should be recorded because no adlitional shares were sold on June 30. 58 L66 points The Norfolk Pine Co purchased 10.000 shares of Peperomia Ginny, Inc. on July 1 at a cost of $18 per share. On December 1, Norfolk Pine sells 600 shares at a price of $20 per share. Norfolk Pine's entry to record this transaction will include a 0 debit to Common Stock…
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. On June 01, received a 50 percent stock dividend. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20, and sold the remaining rights at P4 each and on December 28, sold 400 shares from the stock purchased March 20, at P75, less broker’s fee of P1,000. After September 1 receipt of stock rights, what is the remaining cost of the investment? After the exercise and sale of stock rights, what is the remaining balance of investment? Stock rights are accounted for separately and use the average method.
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. On June 01, received a 50 percent stock dividend. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20, and sold the remaining rights at P4 each and on December 28, sold 400 shares from the stock purchased March 20, at P75, less broker’s fee of P1,000. After receipt of stock dividends, what is the new cost of investment per share? Stock rights are accounted for separately and use the average method.
A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. On June 01, received a 50 percent stock dividend. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 1,000 rights from the stock purchased March 20, and sold the remaining rights at P4 each and on December 28, sold 400 shares from the stock purchased March 20, at P75, less broker’s fee of P1,000. After September 1 receipt of stock rights, what is the remaining cost of the investment? Stock rights are accounted separately and use average method.

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