Journalize the entries to record the preceding transactions. Prepare the investm
ID: 2390072 • Letter: J
Question
Journalize the entries to record the preceding transactions. Prepare the investment-related asset and stockholders' equity balance sheet disclosures for Roman Products, Inc., on December 31, 2011, assuming the Retained Earnings balance on December 31, 2011, is $455,000. Roman Products, Inc., is a wholesaler of men's hair products. The company began operations on January 1, 2010. The following transactions relate to securities acquired by Roman Products, Inc., which has a fiscal year ending on December 31: 2010 Jan. 3. Purchased 3,000 shares of Whalen Inc. as an available-for-sale investment at $46 per share, including the brokerage commission. July 6. Split Whalen Inc. stock 2 for 1 an d received the regular cash dividend of $0.60 per share on the Whalen Inc. stock after the split. Oct. 14. Sold 900 shares of Whalen Inc. stock at $25 per share, less a brokerage commission of $50. Dec. 9. Received the regular cash dividend of $0.60 per share. 31. Whalen Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $21 per share. Use the Valuation Allowance for Available for-Sale Investments account in making the adjustment. 2011 Jan. 5. Purchased an influential interest in Tasmania Co. for $620,000 by purchasing 60,000 shares directly from the estate of the founder of Tasmania. There are 150,000 shares of Tasmania Co. stock outstanding. July 8. Received the regular cash divided of $0.70 per share on Whalen Inc. stock. Dec. 8. Received the regular cash dividend of $0.70 per share plus an extra dividend of $0.15 per share on Whalen Inc. stock. 31. Received $18,000 of cash dividends on Tasmania Co. stock. Tasmania Co. reported net income of $74, 000 in 2011 Roman Products uses the equity method of accounting for its investment in Tasmania Co. 31. Whalen Inc is classified as an available-for-sale investment and is adjusted to a fair value of $26 per share. Use the Valuation Allowance for Available-for-Sale Investments account in making the adjustment.Explanation / Answer
Date
Particulars
Dr.
Cr.
3-Jan-10
Available for sale Investment Crystal
$138,000
Cash [3,000 * $46]
$138,000
6-Jul-10
Cash
$3,600
Dividend reserve (6,000 * $0.60)
$3,600
14-Oct-10
Cash ($22,500 - $50)
$22,450
Available for Sale trading investment
$20,700
Gain on Sale of Investments
$1,750
9-Dec-10
Cash
$3,060
Dividend reserve (5,100 * $0.60)
$3,060
31-Dec-10
Valuation Allowance Available for sale of investment
$10,200
Unrealized gain available for sale of investments
$10,200
[$117,300 - $107,100]
5-Jan-11
Available for Sale Investment Tasmania co.
$620,000
Cash
$620,000
8-Jul-11
Cash
$3,570
Dividend reserve ($0.85 * 5,100)
$3,570
31-Dec-11
Cash
$4,335
Dividend reserve ($0.85 * 5,100)
$4,335
31-Dec
Cash
$18,000
Dividend reserve
$18,000
31-Dec
Investment in Bulls Eye
$29,600
Income of Tasmania (40% of 74,000)
$29,600
31-Dec
Unrealized loss on trading on investments
$15,300
Valuation allowance on trading investments
$15,300
Date
Particulars
Dr.
Cr.
3-Jan-10
Available for sale Investment Crystal
$138,000
Cash [3,000 * $46]
$138,000
6-Jul-10
Cash
$3,600
Dividend reserve (6,000 * $0.60)
$3,600
14-Oct-10
Cash ($22,500 - $50)
$22,450
Available for Sale trading investment
$20,700
Gain on Sale of Investments
$1,750
9-Dec-10
Cash
$3,060
Dividend reserve (5,100 * $0.60)
$3,060
31-Dec-10
Valuation Allowance Available for sale of investment
$10,200
Unrealized gain available for sale of investments
$10,200
[$117,300 - $107,100]
5-Jan-11
Available for Sale Investment Tasmania co.
$620,000
Cash
$620,000
8-Jul-11
Cash
$3,570
Dividend reserve ($0.85 * 5,100)
$3,570
31-Dec-11
Cash
$4,335
Dividend reserve ($0.85 * 5,100)
$4,335
31-Dec
Cash
$18,000
Dividend reserve
$18,000
31-Dec
Investment in Bulls Eye
$29,600
Income of Tasmania (40% of 74,000)
$29,600
31-Dec
Unrealized loss on trading on investments
$15,300
Valuation allowance on trading investments
$15,300
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