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.

Answer 1

Answer:
(a)	2018
	Aug. 1	Cash (1800 X $.50)				900
			Dividend Revenue				900
	Sept. 1	Cash [(1440 X $6) ]				8640
		Loss on Sale of Stock Investments				1440
			Stock Investments (1,440 X $7)				10080
	Oct-01	Cash [(720 X $31)]				22320
			Stock Investments (720 X $28)				20160
			Gain on Sale of Stock Investments				2160
											Nov-01	Cash (1400 X $1)				$     1,400
			Dividend Revenue				$            1,400
											Dec. 15	Cash (1080 X $0.50)				$        540
													Dividend Revenue				$               540
											Dec-31	Cash (3360 X $1)				$     3,360
			Dividend Revenue				$            3,500
												Stock Investments
												2018			2018
Jan. 1	Balance	1,09,200	Sept. 1		10,080
			Oct. 1		20,160
2018
Dec. 31	Balance	78,960
						(b)	Dec. 31					Unrealized Gain or Loss—Equity (78960-74960)					4,000
			Market Adjustment—Available-  for-Sale							4,000
		Security			Bal sahre	Fair Value per share
		Gehring Co. common			1080	30	$          32,400
		Wooderson Co. common			3,360	6	$          20,160
		Kitselton Co. common			1,400	16	$          22,400
							$          74,960
(c )	Investments
	Investments in stock of less than
	20% owned companies, at fair value					$   74,960
	Stockholders' equity
	Common stock						$     14,00,000
	Retained earnings						$     10,00,000
	Total paid-in capital and retained earnings						$     24,00,000
	Less: Unrealized loss on available-for-sale securities						$            4,000
	Total stockholders' equity						$     23,96,000
Please like ( Positive Rating )