On December 31, 2014, Turnball Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee.
|
Common Stock |
Shares |
Cost |
|
Gehring Co. |
2,000 |
$60,000 |
|
Wooderson Co. |
5,000 |
45,000 |
|
Kitselton Co. |
1,500 |
30,000 |
On December 31, 2014, the total fair value of the securities was equal to its cost. In 2015, the following transactions occurred.
July 1Received $1 per share semiannual cash dividend on Wooderson Co. common stock.
Aug. 1Received $0.50 per share cash dividend on Gehring Co. common stock.
Sept. 1Sold 1,500 shares of Wooderson Co. common stock for cash at $8 per share.
Oct. 1Sold 800 shares of Gehring Co. common stock for cash at $33 per share.
Nov. 1Received $1 per share cash dividend on Kitselton Co. common stock.
Dec. 15Received $0.50 per share cash dividend on Gehring Co. common stock.
31Received $1 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. $32, Wooderson Co. $8, and Kitselton Co. $18.
Instructions
(a)Journalize the 2015 transactions and post to the account Stock Investments. (Use the T-account form.)
(b)Prepare the adjusting entry at December 31, 2015, 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, 2015. At this date, Turnball Associates has common stock $1,500,000 and retained earnings $1,000,000.