MD-4 Determining Financial Statement Effects of Trading Securities Transactions

Question

MD-4 Determining Financial Statement Effects of Trading Securities Transactions Princeton Company acquired some of the 98,000 outstanding shares of the common stock of Cox Corporation as trading securities. The accounting period for both companies ends December 31. July 2 Purchased 9,800 shares of Cox common stock at $28 per share. Dec. 15 Cox Corporation declared and paid a cash dividend of $2 per share. Dec. 31 Determined the fair value of Cox stock to be $29 per share. Required: Indicate the effects (direction and amount) of the transactions listed above. (Enter any decreases to account balances with a minus sign.)

Explanation / Answer

Solution :

Date Balance Sheet Income Statement Assets = Liabilities + Stockholder's Equity Net Income = Revenue - Expenses 2-Jul Investment in Trading securities $274,400.00 Cash -$274,400.00 15-Dec Cash $19,600.00 = $19,600.00 $19,600.00 = Dividend Revenue $19,600.00 31-Dec Fair value adjustment $9,800.00 = $9,800.00 9800 = Gain on trading securities $9,800.00

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.