Question

BUSI 1043 Group 3 Unit 11 Final Exam-Saved File Home Insert Draw Khusus Kaut Layout Review View Table Delete Insert Merge E Style Options Shading 4 Text AutoFit Cell Size Distribute During the year ended December 31, 2019, and in the following months of January and February 2020, Company M had the following transactions pertaining to it held for trading investments: Apr. 1 Purchased 2,000 Stary Corporation S5, preferred shares for $206,000 cash. July 1 Received quarterly cash dividend. 2 Sold 500 Starr shares for $57,500 cash. Oct 1 Received quarterly cash dividend. Starr declared the quarterly dividend on November 22, to preferred shareholders of record on December 15, payable on January 1. Dec. 31 Starr's shares were trading at $116 per share. Due to an urgent need for cash, 700 Start Corporation shares were sold despite a drop in the share price Jan. 31 to $92 per share Feb. 15 Marshall sold an additional 500 Starr shares after the market recovered to $118 per share. Nov. 22 Instructions a) Record the above transactions, using the fair value through profit or loss model. Prepare any required adjusting entries at December 31.

Answer 1

JOURNAL
Date	Particulars	Debit	Credit
1-Apr	Investment in $5 preferred stock	206000
	Cash		206000
	(Being 2000 shares purchased @ $103)
1-Jul	Cash	2500
	Dividend Income		2500
	(Being dividend received= 2000*$5*3/12)
2-Jul	Cash	57500
	Investment in $5 preferred stock		51500
	Profit on sale- Fair value through profit&loss		6000
	(Being shares sold @$115)
1-Oct	Cash	1875
	Dividend income		1875
	(Being dividend income on 1500 shares=1500*5*3/12)
22-Nov	Dividend receivable	1875
	Dividend income		1875
	(Being accrued income recorded)
31-Dec	Investment in $5 preferred stock	19500
	Fair value through Profit and loss		19500
	(Being increase in value 116-103= $13*1500 rcorded)