Question

Current Attempt in Progress In January 2020, the management of Ivanhoe Company concludes that it has sufficient cash to permi
Journalize the transactions and post to the accounts Debt Investments and Stock Investments. Use the T-account form) (Record
Stock Investments < Debt Investments e Textbook and Media List of Accounts Prepare the adjusting entry at December 31, 2020,
List of Accounts Show the balance sheet presentation of investment securities at December 31, 2020. Ivanhoe Company Balance S
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Answer :-

Solution 1:

Journal Entries - IVANHOE Company
Date Particulars Debit Credit
1-Feb Stock Investment Dr $38,500.00
           To Cash $38,500.00
(To record investment in share of Muninger)
1-Mar Stock Investment Dr $22,500.00
           To Cash $22,500.00
(To record investment in share of Tatman)
1-Apr Debt Investment Dr $52,500.00
           To Cash $52,500.00
(To record investment in bond)
1-Jul Cash Dr (700*$0.60) $420.00
           To Dividend revenue $420.00
(To record dividend revenue)
1-Aug Cash Dr (233*$65) $15,415.00
           To Stock investment ($38,500/700*233) $12,815.00
           To Gain on sale of stock investment $2,600.00
(To record sale of stock investment)
1-Sep Cash Dr (900*$2) $1800.00
           To Dividend revenue $1800.00
(To record dividend revenue)
1-Oct Cash Dr ($52,500*3.00%) $1,575.00
           To Interest revenue $1,575.00
(To record interest revenue)
1-Oct Cash Dr $51,500.00
Loss on sale of debt investment Dr $1,000.00
           To Debt Investment $52,500.00
(To record sale of debt ivnestment)

Solution 2:

Stock Investment
Date Debit Date Credit
1-Feb $38,500.00 1-Aug $12,815.00
1-Mar $22,500.00
Ending balance $48,185.00
Debt Investment
Date Debit Date Credit
1-Apr $52,500.00 1-Oct $52,500.00

Solution 3:

Journal Entries - IVANHOE Company
Date Particulars Debit Credit
31-Dec Unrealized loss - Income Dr ($48,185 - 466*$56 + 900*$24) $489.00
           To Fair value adjustment $489.00
(To record adjusting entry to present investment at fair value)

Solution 4:

IVANHOE Company
Balance Sheet (Partial)
As on December 31,2020
Particulars Amount
Stock Investment $48,185.00
Less: Fair value adjustment $489.00 $47,696.00
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