Question

Problem 16-5A 210 The following securities are in Frederick Company's portfolio of long-term available-for-sale securities at December 31, 2017 Cost 82,50D 96,000 39,000 1,500 shares af Wil hite Corporatian common stack 1,500 shares of Hutcherson Corporation common stock 1,300 shares of Downing Corporation preferred stock On December 31, 2017, the total cost of the porttolio equaled total fair value. Frederick had the following transactions related to the securities during 2018. Jan. 20 Sold all 1,500 shares of Willhite Corporation common stock at $58 per share. 28 Purchased GOD shares of $70 par value common stock of Liggott Corporation at $78 per share 30 Recelved a cash dividend of $1.00 per share on Hutcherson Corp, common stock Feb. Received cash dividends of $0.50 per share on Downing Corp. preferred stock 18 Sold all 1,300 shares of Downing Corp. praferred stock at $29 per share. Recelved a cash dividend of $1.00 per share on Hutcherson Corp. common stock. Purchased an additional 970 shares of $15 par value common stock of Liggett Corporation at $82 per share. Recoived a cash dividend of $1.40 per share on Liggett Corparation common stock. July 30 Sept. 6 Dec. 1 t December 31, 2018, the fair values of the securities were Hutcherson Carporation common stock $08 per shara Liggett Corporation common stock $72 per share are automatically indented when Prepare journal entries to record the transactions. (Credit accournt titles a journal entries in the order presented in the problen.) 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. Record Date Ncount Titles and Explanation Debit Credit Feb. 18 rder of journal entrias Post to the investment accounts. (Use T-accounts.) (Post entries In the a presented in the previous part.) SHOW ILTST OF ACCOUNTS LINK TO TEXT LINK TO TEXT prepara tna ad usting entry at Decminer 31 o for the amounts. 2018 to report the po olit at fair value.(Credit account uto natica V inder te d v ntered. Do not nent naantia Noantry "for the conunt tit es and enter t en amount not indant r no·ntry is require select es are for thesting Date Account Titles and Explanation Debit SHOW LIST OF ACCOLUNTS Show the balance sheet presentation at December 31, 2018, tor the investment-related accounts. Frederick Company Balance Sheet (Partial) Click il you would like to Show Work for this question: ren Show Work SHOW LTST OF AGCOUNTS LTNK TO TEXT LINK TO TEXT

Answer 1

Ques 1

a)
Jan. 20	Cash (	87,000
	stock investment		82500
	Gain on Sale of Stock
	Investments.		4,500
28	stock investment	46,800
	Common Stock		46,800
	Cash
30	Cash	1,500
	Dividend Revenue		1,500
Feb. 8	Cash	650
	Dividend Revenue		650
18	Cash	37,700
	Loss on Sale of stock investment	1,300
	stock investment		39,000
Jul-30	Cash .	1,400
	Dividend Revenue		1,400
Sept. 6	stock investment	79,540
	Cash		79,540
Dec. 1	Cash .	2,198
	Dividend Revenue		2,198

Ques 2

Stock investments
opening balance	217500	Jan. 20	82500
Jan-28	46,800	Feb-18	39,000
Sept. 6	79,540
balance	222340

Ques 3

(c)
Security	Cost	Fair Value
hutcherson Corporation common	$96,000	$102,000
liggett Corporation common	126,340	113,040
	$222,340	$215,040
Unrealized Gain or Loss—Equity	7,300
Fair value Adjustment—Available- for-Sale		7,300

Ques 4

d)
Current Assets
Stock investments	$215,040
Stockholders’ equity
Total paid-in capital and retained earnings
Less: Unrealized loss on available-for-sale
securities	7,300
Total stockholders’ equity