On 2010 October 17, Strong Company purchased the following common stocks (all trading securities) at the indicated per share prices that included commissions:
|
600 shares of X Company common stock @ $216 |
$129,600 |
|
1,000 shares of Y Company common stock @ $144 |
144,000 |
|
1,600 shares of Z Company common stock @ $72 |
115,200 |
|
$388,800 |
On 2010 December 31, the market prices per share of the above common stocks were X, USD 223.20; Y, USD 136.80; and Z, USD 54. Summarized, the cash dividends per share received in 2011 were X, USD 14.40; Y, USD 7.20; and Z, USD 5.40. On 2011 December 31, the per share market prices were X, USD 252.80; Y, USD 115.20; and Z, USD 72. All of these changes in market prices are considered temporary. Prepare journal entries for all of these transactions, including calendar year-end adjusting entries, assuming the shares of common stock acquired are considered trading securities. If the securities acquired are considered available-for-sale securities, how would the entries differ? For both parts a and b, give the descriptions (titles) and the dollar amounts of the items that would appear in the income statements for 2010 and 2011.