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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

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.

Jun 18 2020 View more View Less

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