Swifty, Inc. had the following equity investment portfolio at January 1, 2020. Evers Company 970 shares...
Swifty, Inc. had the following equity investment portfolio at January 1, 2020.
Evers Company 970 shares @ $16 each $15,520
Rogers Company 890 shares @ $19 each $16,910
Chance Company 510 shares @ $9 each $4,590
Equity investments @ cost 37,020
Fair value adjustment (7,490 )
Equity investments @ fair value $29,530
During 2020, the following transactions took place.
1. On March 1, Rogers Company paid a $2 per share dividend.
2. On April 30, Swifty, Inc. sold 310 shares of Chance Company for $10 per share.
3. On May 15, Swifty, Inc. purchased 90 more shares of Evers Company stock at $17 per share.
4. At December 31, 2020, the stocks had the following price per share values: Evers $18, Rogers $18, and Chance $8.
During 2021, the following transactions took place.
5. On February 1, Swifty, Inc. sold the remaining Chance shares for $8 per share.
6. On March 1, Rogers Company paid a $2 per share dividend.
7. On December 21, Evers Company declared a cash dividend of $3 per share to be paid in the next month.
8. At December 31, 2021, the stocks had the following price per share values: Evers $20 and Rogers $20.
1. Prepare journal entries for each of the above transactions
2. Prepare a partial balance sheet showing the investment-related amounts to be reported at December 31, 2020 and 2021
Homework Answers
1.
| Date | Account Titles | Debit | Credit | |
| 2020 | $ | $ | ||
| 1. | March 1 | Cash | 1,780 | |
| Dividend Revenue | 1,780 | |||
| 2. | April 30 | Cash | 3,100 | |
| Gain on Sale of Investments | 310 | |||
| Equity Investments | 2,790 | |||
| 3. | May 15 | Equity investments | 1,530 | |
| Cash | 1,530 | |||
| 4. | Dec 31 | Fair Value Adjustment | 8,430 | |
| Unrealized Holding Gain or Loss : Income | 8,430 | |||
| 2021 | ||||
| 5. | Feb 1 | Cash | 1,600 | |
| Loss on Sale of Investments | 200 | |||
| Equity Investments | 1,800 | |||
| 6. | Mar 1 | Cash | 1,780 | |
| Dividend Revenue | 1,780 | |||
| 7. | Dec 21 | Dividend Receivable | 3,180 | |
| Dividend Revenue | 3,180 | |||
| 8. | Dec 31 | Fair Value Adjustment | 2,960 | |
| Unrealized Holding Gain or Loss : Income | 2,960 |
2.
| Swifty
Inc. Balance Sheet ( Partial) December 31 |
||
| 2020 | 2021 | |
| Current Assets | ||
| Dividend Receivable | - | $ 3,180 |
| Investments | ||
| Equity Investments, at fair value | $ 36,700 | 39,000 |
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