Garden Company completes the following selected transactions related to its short term investments during 2011.
May 8 Purchased 300 shares of FedEx stock as a short term investment in available for sale securities at $40 per share plus $975 in broker fees.
Sept. 2 Sold 100 shares of its investment in FedEx stock at $47 per share and held the remaining
200 shares; broker’s commission was $225.
Oct. 2 Purchased 400 shares of Ajay stock for $60 per share plus $1,600 in commissions. The stock is held as a short term investment in available for sale securities.
Required
1. Prepare journal entries for the above transactions of Garden Company for 2011.
2. Prepare an adjusting journal entry as of December 31, 2011, if the fair values of the equity securities held by Garden Company are $48 per share for FedEx and $55 per share for Ajay. (Year 2011 is the first year Garden Company acquired short term investments.)