Jounalize transactions and P12-3A On December 31, 2017, Turnball Associates owne
ID: 2570204 • Letter: J
Question
Jounalize transactions and P12-3A On December 31, 2017, Turnball Associates owned the following securities or control of the adjusting entry for stock investments as a long-term investment. The securities are not held for influence investee (LO 2, 3) Cost $60,000 45,000 30,000 Common Stock Gehring Co. Wooderson Co Kitselton Co. Shares 2,000 5,000 1,500 XLS On December 31, 2017, the total fair value of the securities was equal to its cost. In 2018, the following transactions occurred Aug. 1 Received $0.50 per share cash dividend on Gehring Co. common stock. Sept. 1 Sold 1,500 shares of Wooderson Co. common stock for cash at $8 per share. Oct. 1 Sold 800 shares of Gehring Co. common stock for cash at $33 per share. Nov. 1 Received $1 per share cash dividend on Kitselton Co. common stock. Dec. 15 Received $0.50 per share cash dividend on Gehring Co. common stock. 31 Received $1 per share annual 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 2018 transactions and post to the account Stock Investments. (Post i T-account form.) The stock should be classified as available-for-sale securities. 31, 2018. At this date, Turnball Associates has common stock $1,500,000 and retaine Unrealized loss $4,100 (b) Prepare the adjusting entry at December 31, 2018, to show the securities at fair valu (c) Show the balance sheet presentation of the investment-related accounts at Decemb earnings $1,000,000.Explanation / Answer
a. Journal Entry
Date
Particulars
Dr. Amount (In $)
Cr. Amount (In $)
Aug 1
Cash
TO Dividend income
(2,000 shares x $0.50 per share)
1,000
1,000
Sept 1
Cash (1,500 x $8)
Loss on sale of Investment (1,500 x $1)
TO Investment in Wooderson Co. (1,500 x $9)
12,000
1,500
13,500
Oct 1
Cash (800 shares x $33)
TO Investment in Gehring Co. (800 x $30)
TO Gain on sale of Investment (800 x $3)
26,400
24,000
2,400
Nov 1
Cash
TO Dividend Income
1,500
1,500
Dec 15
Cash (1,200 shares x $0.50)
TO Dividend Income
600
600
Dec 31
Cash (3,500 shares x $1)
TO Dividend Income
3,500
3,500
General Ledgers
Investment in Wooderson Co.
Particulars
Amount
Particulars
Amount
Balance on 1st Jan 2018
45,000
Cash
12,000
Loss on sale of Investment
1,500
Balance on 31st Dec 2018
31,500
TOTAL
45,000
TOTAL
45,000
Investment in Wooderson Co.
Particulars
Amount
Particulars
Amount
Balance on 1st Jan 2018
60,000
Cash
24,000
Balance on 31st Dec 2018
36,000
TOTAL
60,000
TOTAL
60,000
b. Adjusting Entries
Date
Particulars
Dr. Amount (In $)
Cr. Amount (In $)
Dec 31
Investment in Gehring
TO Unrealized gain on Gehring stock
2,400
2,400
Dec 31
Unrealized Loss on Wooderson stock
TO Investment in Wooderson
3,500
3,500
Dec 31
Unrealized Loss on Kitselton stock
TO Investment in Kitselton stock
3,000
3,000
Date
Particulars
Dr. Amount (In $)
Cr. Amount (In $)
Aug 1
Cash
TO Dividend income
(2,000 shares x $0.50 per share)
1,000
1,000
Sept 1
Cash (1,500 x $8)
Loss on sale of Investment (1,500 x $1)
TO Investment in Wooderson Co. (1,500 x $9)
12,000
1,500
13,500
Oct 1
Cash (800 shares x $33)
TO Investment in Gehring Co. (800 x $30)
TO Gain on sale of Investment (800 x $3)
26,400
24,000
2,400
Nov 1
Cash
TO Dividend Income
1,500
1,500
Dec 15
Cash (1,200 shares x $0.50)
TO Dividend Income
600
600
Dec 31
Cash (3,500 shares x $1)
TO Dividend Income
3,500
3,500
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