Question - Rantzow-Lear Company buys and sells securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during Decmeber 2011 and the first week of 2012.
2011
Dec. 17 Purchased 100,000 Grocers' Supply Corporation preferred shares for $350,000.
28 Received cash dividends of $2,000 from the Grocers' Supply Corporation prefered shares.
31 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation preferred shares. The market price of the stock was $4 per share
2012
Jan. 5 Sold the Grocers' Supply Corporation preferred shares for $395,000.
Required:
Prepare the appropriate journal entry for each transaction. Indicate any amounts that Rantzow-Lear Company would report in its 2011 balance sheet and income statement.