Question: On December 31, 2017, Turnball Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee.
|
Common Stock
|
|
Shares
|
|
Cost
|
| Gehring Co. |
|
1,800 |
|
$50,400 |
| Wooderson Co. |
|
4,800 |
|
33,600 |
| Kitselton Co. |
|
1,400 |
|
25,200 |
On December 31, 2017, the total fair value of the securities was equal to its cost. In 2018, the following transactions occurred.
| Aug. |
1 |
|
Received $0.50 per share cash dividend on Gehring Co. common stock. |
| Sept. |
1 |
|
Sold 1,440 shares of Wooderson Co. common stock for cash at $6 per share. |
| Oct. |
1 |
|
Sold 720 shares of Gehring Co. common stock for cash at $31 per share. |
| Nov. |
1 |
|
Received $1 per share cash dividend on Kitselton Co. common stock. |
| Dec. |
15 |
|
Received $0.50 per share cash dividend on Gehring Co. common stock. |
| Dec. |
31 |
|
Received $1 per share annual cash dividend on Wooderson Co. common stock. |
At December 31, the fair values per share of the common stocks were: Gehring Co. $30, Wooderson Co. $6, and Kitselton Co. $16.
a- Journalize the 2018 transactions and post to the account Stock Investments. (Use the T-account form.)
b- Prepare the adjusting entry at December 31, 2018, to show the securities at fair value. The stock should be classified as available-for-sale securities.
c- Show the balance sheet presentation of the investments at December 31, 2018. At this date, Turnball Associates has common stock $1,400,000 and retained earnings $1,000,000.