Question

ProBLEM 2. In January 2012, the management of Gina Company concludes that it has sufficienn purchase some short-term investments in debt and stock securities. During the year, the following transactions occurred. Purchased 500 shares of Joy common stock for $30,000, plus brokerage fees of $800. Purchased 600 shares of Aurelius common stock for $20,000, plus brokerage fees of $300. Feb. 1 Mar. 1 Purchased 40 $1,000, 9% Sikich bonds for $40,000, plus $1,200 brokerage fees. Interest Is payable semiannually on April 1 and October 1. Received a cash dividend of $0.60 per share on the Joy common stock. Sold 300 shares of Joy common stock at $69 per share, less brokerage fees of $350. Received a $1 per share cash dividend on the Aurelius common stock. Received the semiannual interest on the Sikich bonds. Apr. 1 July 1 Aug. 1 Sept. 1 Oct. 1 Oct. 1 Sold the Sikich bonds for $45,000, less $1,000 brokerage fees. At December 31, the fair value of the Joy common stock was $66 per share. The fair value of the Aurelius common stock was $29 per share. Instructions (a) Journalize the transactions and post to the accounts Debt Investments and Stock Invest- ments. (Use the T-account form.) (b) Prepare the adjusting entry at December 31, 2012, to report the investments at fair value. All securities are considered to be trading securities. PROBLE M.3 Tuecke's Concrete acquired 20% of the outstanding common stock of Drew, Inc. on January 1, 2012, by paying $1,100,000 for 40,000 shares. Drew declared and paid a $0.50 per

Answer 1

Auguter- e) Jourual euties Date 2ok slack Investinents oe parieulary LF Debit $30, 800 Credit Dr peb1 $30,800 To Cash 30,000+$800 Mar- stock Investmeuts ale $20,300 DY $29300 To Carh iia000+$300] $4LR00 Apr- oebt Investments Ae $H1,200 TO cashfi H0,000+$1200] Jul- Carh ae s0o x40.60] To pivideud Reveuue $300 Dr $300 Aug- casl ak [(s00 x$69)- 50] Dr To stack Investmeut $20350 $18,480 "To Gain ou Sale f stock Investmeus $1870 sep cash k (600 x +] DY కరంం TO Divi deud Revenue oct cash 4e(+40.000x9%*½] TO Interest Peveuue $1.800 DY $1800 cash Ak [$45,000-$1000] TO profit ou Investmeuls TO Debt Iuvestmeuts [40,000+$L200] $44,000 $2,800 Salet debt $4,200 stock Tnvestmeut Account particulars or partieubrs Amount Dale $30.800 Aug cash $24300 $32,620 Date Febl Cash Har Cash Amount $18480 Dec-3 Balauce Debl- Investmeuts Accouut Amouut Dak $41200 ceH cash $0. br particulars particulars Amaint $41,200 pate Ap- carh Dec Ralauee b) Tarnaleutry LF Debit 2020 credit Dartieulars pate 2012 Dre-1 unsealized 6ss. Income e "To Fair valu Adjutment- Bae.620-430, 6083 Dr $2020 Trading Fair value (eOox466) $19,200 securit Joy sbck cost $12,320 Auselium e9300 (60o x429) 17400 $32,620 $10600