Question

Crane, Inc. had the following equity investment portfolio at January 1, 2020.

Evers Company		1,050 shares @ $15 each		$15,750
Rogers Company		890 shares @ $22 each		19,580
Chance Company		490 shares @ $8 each		3,920
Equity investments @ cost				39,250
Fair value adjustment				(7,510	)
Equity investments @ fair value				$31,740

During 2020, the following transactions took place.

1.		On March 1, Rogers Company paid a $2 per share dividend.
2.		On April 30, Crane, Inc. sold 300 shares of Chance Company for $12 per share.
3.		On May 15, Crane, Inc. purchased 90 more shares of Evers Company stock at $16 per share.
4.		At December 31, 2020, the stocks had the following price per share values: Evers $17, Rogers $21, and Chance $7.

During 2021, the following transactions took place.

5.		On February 1, Crane, Inc. sold the remaining Chance shares for $7 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 $19 and Rogers $23.

A) Prepare journal entries for each of the above transactions

B)Prepare a partial balance sheet showing the investment-related amounts to be reported at December 31, 2020 and 2021.

Answer 1

Crane Company (a) Prepare journal entries for each of the above transactions. Mar 1, 20 1.780 Cash Dividend Revenue ($2.00 ~ 890 shares) 1,780 3.600 Apr 30, 20 Cash Gain on Sale of Inv [($12-$8)x300 sh] Equity Investments (Available-for-Sale) 1,200 2,400 1,440 May 15, 20 Equity Investments (Available-for-Sale) Cash ($16.00 x 90 shares) 1.440 Dec 31, 20 Fair Value Adjustment (Available-for-Sale) Unrealized Holding Gain or Loss-Equity 8,620 8,620 Security Cost Fair Value Unrealized Gain (Loss) 19,380 2,190 18,690 -890 Evers Company ($15,750 + $1,440) 1 17,190 | [(1,050 sh + 90 sh) < $17.00 per sh] Rogers Company ($19,580) 19,580 (890 sh < $21.00 per sh] Chance Company ($3,920 - $2,400) 1,520 [(490 sh - 300 sh) < $7.00 per sh] Total of Portfolio 38,290 Previous securities fair value adjustment bal.—Cr. Securities fair value adjustment-Dr. 1,330 39,400 -190 1,110 -7,510 8,620 Feb 1, 20 Cash ($7.00 X 190 shares) Loss on Sale of Inv [($7-$8) 190 sh] Equity Investments Available-for-Sale) 1,330 190 L 1,520 Mar 1, 20 Cash ($2.00 890 shares) Dividend Revenue 1,780 1,780 3,420 Dec 21, 20 Dividends Receivable ($3.00 x 1,140 sh) Dividend Revenue 3,420 Dec 31, 20 Fair Value Adjustment (Available-for-Sale) Unrealized Holding Gain or Loss-Equity 4,250 4,250 Security Cost Fair Value Unrealized Gain (Loss) 21,660 4,470 Evers Company ($15,750 + $1,440) 17,190 [(1,050 sh + 90 sh) < $19.00 per sh] Rogers Company ($19,580) 19,580 (890 sh < $23.00 per sh] Total of Portfolio 36,770 Previous securities fair value adjustment bal.-Cr. Securities fair value adjustment-Dr. 20,4701 42,130|| 890 5,360 1.110 4.250 (b) Prepare a partial balance sheet showing the Investments account at December 31, 2020, and 2021. December 31, 2020 December 31, 2021 $3,420 Partial Balance Sheet as of Current Assets - Dividends Receivable Investments: Available-for-sale securities, at fair value Stockholders' equity: Accumulated other comprehensive gain $39,400 $42,130 $1,110 $5,360