Question

Problem 12-3A (Part Level Submission) On December 31, 2015, Turnball Associates owned the following securities, held as a long-term investment. The secunities are not held for influence or control of the investee. Gehring Co Wooderson Co. Kitselton Co. 2,160 4,980 1,400 $69,120 44,820 26,600 On December 31, 2015, the total fair value of the securities was equal to its cost. In 2016, the following transactions occurred. Duly Received $2 per share semiannual cash dvidend on Wooderson Co. common stock. Aug. 1 Received $0.50 per share cash dividend on Gehring Co. common stock Sept. Sold 1,494 shares of Wooderson Co. common stock for cash at $8 per share. Oct. 1 Sold 864 shares of Gehring Co. common stock for cash at $35 per share. Nov. 1 Received $2 per share cash dividend on Kitselton Co. common stock. Dec. 15 Received $0.50 per share cash dividend on Gehring Co, common stock Dec. 31 Received $2 per share semiannual cash dividend on Wooderson Co. common stock. At December 31, the fair values per share of the common stocks were: Gehring Co, $34, Wooderson Co, s8, and Ksselton Co. $17 Your answer is correct. ournalize the 2016 transactions and post to the account Stock Investments. (Use the T-account form.) (Credit account titles are automatically indented when amount is entered. Do no "No entry" for the account titles and enter 0 for the amounts. Date Account Tities and Debit Credit 7260 반' vidend Revenuel Aug. ash 080 080 Sept. 952 Sale o 240 만' 27648 d Revenue Dec. 1 vidend Revenue ▼ (b) [ Your answer is correct. Prepare the adjusting entry at December 31, 2016, to show the securities at fair value. The stock should be classified as available-for-sale securities. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 TUnrealized Gain or Loss-E 3694 Fair Value Adjustment- 3694 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT VIDEO SIMILAR PROBLEM Attempts: 2 of 5 used ▼ (c) Show the balance sheet presentation of the investments at December 31, 2016. At this date, Turnball Associates has common stock $1,538,900 and retained earnings $1,075,600. Balance Sheet (Partial) December 31, 2016 SHOW LIST OF ACCOUNTS LINK TO TEXT VIDEO: SIMILAR PROBLEM eyPolicy I 2000-2019JohnWiley & Sons.Inc. Al Rights Reserved. A Division of John Wiley & Sons, Inc. Version 4.24.14.7

Answer 1

Turnball Associates Journal Enteries Date Particulars Debit in $ Credit in $ Jul-01 Cash a/c 9960 To Dividend Revenue 9960 Dividend recd. From Wooderson Co Aug-01 Cash a/c Dr. 1080 To Dividend Revenue 1080 (Dividend recd. From Gehring Co.) Sep-01 Cash a/c Dr. 11952 Loss on Sale of Stock Investments a/c Dr 1494 To Stock Investments 13446 Sold 1494 shares of Wooderson Co (44820 / 4980 ) 9 x 1494 = 13446, 1494 x 8 11952 Oct-01 Cash a/c Dr. 30240 To Stock Investments To Gain on sale of stock investments 27648 2592 (Sold 864 shares of Gehring Co.) (69120 / 2160 ) = 32 x 864 = 27648 ; 864 x 35 30240 Nov-01 Cash a/c Dr. 2800 To Dividend Revenue 2800 (Dividend recd. From Kitselton Co.)1400 x 2= 2800 Dec-15 Cash a/c Dr. 648 To Dividend Revenue 648 (Dividend recd. From Gehring Co.) (2160 864)-1296 x 0.50 648 Dec-31 Cash a/c Dr. 6972 To Dividend Revenue 6972 (Dividend recd. From Wooderson Co.(4980-1494)x 2 = 6972 Dec-31 Unrealized Gain or Loss-Equity a/c Dr 3694 To Market Adiustment-Available-for-Sale 3694 (Stocks adjusted for fair value) Security Gehring Co Wooderson Co Kitselton Co Cost Fair Value 41472 31374 27888 26600 99446 23800 95752 (2160-864)*32 41472; (2160-864)*34 44064 (4980-1494)*9 31374; (4980-1494)*9 27888 (1400 17) 23800

Balance sheet (Partial) For the period ending 31.12.2016 Investment in stock of less than 20% owned companies, at fair value 95752 Stockholders' equity Common stock Retained earnings Total paid-in capital and retained ea Less: Unrealized loss on available for-sale securities Total stockholders' equity 1538900 rnings 2614500 3694 2610806