On December 31, 2008, Ramey Associates owned the following securities, held as a longterm investment. The securities are not held for influence or control of the investee.
|
Common Stock |
Shares |
Cost |
|
Hurst Co. |
2,000 |
60,000 |
|
Pine Co. |
5,000 |
45,000 |
|
Scott Co. |
1,500 |
30,000 |
On December 31, 2008, the total fair value of the securities was equal to its cost. In 2009, the following transactions occurred.
1-Jul Received $1 per share semiannual cash dividend on Pine Co. common stock.
1-Aug Received $0.50 per share cash dividend on Hurst Co. common stock.
1-Sep Sold 1,500 shares of Pine Co. common stock for cash at $8 per share, less brokerage fees of $300.
1-Oct Sold 800 shares of Hurst Co. common stock for cash at $33 per share, less brokerage fees of $500.
1-Nov Received $1 per share cash dividend on Scott Co. common stock.
15-Dec Received $0.50 per share cash dividend on Hurst Co. common stock.
31-Dec Received $1 per share semiannual cash dividend on Pine Co. common stock.
At December 31, the fair values per share of the common stocks were: Hurst Co. $32, Pine Co. $8, and Scott Co. $18.
Required:
a. Journalize the 2009 transactions and post to the account Stock Investments. (Use the Taccount form.) (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
b. Prepare the adjusting entry at December 31, 2009, to show the securities at fair value.
The stock should be classified as available-for-sale securities.
c. Show the balance sheet presentation of the investments at December 31, 2009. At this date, Ramey Associates has common stock $1,500,000 and retained earnings $1,000,000. (If there is a loss, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)