Ex. 157
Trent Corporation's balance sheet at December 31, 2010, showed the following:
Short-term investments, at fair value$46,500
Trent Corporation's trading portfolio of stock investments consisted of the following at December 31, 2010:
StockNumber of Shares Cost
Carey Common Stock200$28,000
Adler Preferred Stock4006,000
Hill Common Stock300 9,000
$43,000
During 2011, the following transactions took place:
Feb.5 Sold 50 shares of Carey common stock for $8,000.
Mar.30 Purchased 25 shares of Hill common stock for $950.
Sept.9 Purchased 50 shares of Hill common stock for $2,000.
At year end on December 31, 2011, the market values per share were:
Market Value Per Share
Carey Common Stock$158.00
Adler Preferred Stock$14.00
Hill Common Stock$24.00
Instructions
(a)Prepare the journal entries to record the 2011 stock transactions.
(b)On December 31, 2011, prepare any adjusting entry that might be necessary relative to the trading portfolio.
(c)Show how the stock investments will appear on Trent Corporation's balance sheet at December 31, 2011.
Ex. 158
On January 5, 2011, Reiley Company purchased the following stock securities as a long-term investment:
300 shares Holle Corporation common stock for $4,200.
500 shares Wood Corporation common stock for $10,000.
800 shares Kiley Corporation common stock for $22,800.
Assume that Reiley Company cannot exercise significant influence over the activities of the investee companies and that the cost method is used to account for the investments.
On June 30, 2011, Reiley Company received the following cash dividends:
Holle Corporation............................$2.00 per share
Wood Corporation...........................$1.00 per share
Kiley Corporation............................$1.50 per share
On November 15, 2011, Reiley Company sold 200 shares of Kiley Corporation common stock for $7,500.
On December 31, 2011, the fair value of the securities held by Reiley Company is as follows:
Per Share
Holle Corporation common stock$10
Wood Corporation common stock16
Kiley Corporation common stock28
Instructions
Prepare the appropriate journal entries that Reiley Company should make on the following dates:
January 5, 2011
June 30, 2011
November 15, 2011
December 31, 2011
Ex. 159
Rosen Company purchased 35,000 shares of common stock of Corporation as a long-term investment for $700,000. During the year, Polo Corporation reported net income of $300,000 and paid dividends of $100,000.
Instructions
(a)Assuming that the 35,000 shares represent a 10% interest in Polo Corporation:
1.Prepare the journal entry to record the investment in Polo stock.
2.Prepare any entries that Rosen Company should make in accounting for its investment in Polo stock during the year.
3.What is the balance of the Stock Investments account on Rosen Company's books at the end of the year?
(b)Repeat requirement (a) above except assume that the 35,000 shares represent a 20% interest in Polo Corporation.