On February 15, Jewel Company buys 7,500 shares of Marcelo Corp. common at $28.5

Question

On February 15, Jewel Company buys 7,500 shares of Marcelo Corp. common at $28.58 per share plus a brokerage fee of $420. The stock is classified as available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On March 15, Marcelo Corp. declares a dividend of $1.20 per share payable to stockholders of record on April 15. Jewel Company received the dividend on April 15 and ultimately sells half of the Marcelo Corp. stock on November 17 of the current year for $29.35 per share less a brokerage fee of $275. The fair value of the remaining 3,750 shares is $29.55 per share. The amount that Jewel Company should report in the asset section of its year-end December 31 balance sheet for its investment in Marcelo Corp. is: Multiple Choice $214,770. $2,402. $110,812. $3,428.

Explanation / Answer

Answer is $ 110812 Cost of Investment (7500*28.58 + 420) 214770 Less: Cost of Investment sold 107385 Cost of Unsold Investment 107385 Market value of Investment (3750*29.55) 110812.5 The Investment shall be shown at $ 110812 The Fair value adjustment (Gain) is $ 3427 However, Assets section shows Investment at $ 110812

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