Rantzow-Lear Company buys and sells securities expecting to earn profits on short-term differences in price. The company’s fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear’s trading account occurred during December 2011 and the first week of 2012.
Dec.17 – purchaused 100,000 Grocer’s Supply Corporation preferred shares
Dec. 28 – received cash dividends of $2,000 from the grocer’s supply corporation preferred shares
Dec. 31 – recorded any necessary adjusting entry relating to the Grocers’s Supply Corporationprefferrd shares. The market price of the stock was $4 per share.
Jan. 5- sold the grocer’s supply corporation preferred shares for $395,000.
Required: 1. Prepare the appropriate journal entry for each transaction
2. Inficate any amounts that Rantzow-Lear Company would report in its 2011 balance sheet and income statement as a result of this investment.