Problem: The following are in Sanders Company’s portfolio of long term available for sale securities at December 31, 2006.
Cost
500 shares of Bonds Corporation common stock $26,000
700 shares of Ruth Corporations common stock $42,000
600 shares of Edmonds Corporation preferred stock $16,800
On December 31, the total cost of the portfolio equaled total fair value. Sanders Company had the following transactions related to the securities during 2007.
Jan. 7. Sold 500 shares of Bonds Corporation common stock at $58 per share, less brokerage fess of $700.
10. Purchased 200 shares of the $70 par value common stock of Schilling Corporation at $78 per share, plus brokerage less of $240.
26. Received a cash dividend of $1.15 per share on Ruth Corporation common stock.
Feb 2. Received cash dividends of $0.40 per share of Edmonds Corporation preferred stock.
10. Sold all 600 shares of Edmonds Corporation preferred stock at $25 per share less brokerage fees of $180.
July 1. Received a cash dividend of $1.00 per share on Ruth Corporation common stock.
Sept. 1. Purchased an additional 800 shares of the $70 par value common stock of Schilling Corporation at $75 per share, plus brokerage fees of $900.
Dec. 15. Received a cash dividend of $1.50 per share on Schilling Corporation common stock.
At December 31, 2007, the fair values of the securities were:
Ruth Corporation common stock $63 per share
Schilling Corporation common stock $72 per share
Sanders uses separate account titles for each investment, such as Investment in Ruth Corporation Common Stock.
Instruction
a.) Prepare journal entries to record the transactions.