Problem - On December 31, 2014, Turnball Associates owned the following securities, held as a long-term investment. The securities are not held for influence or control of the investee.
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Common Stock
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Shares
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Cost
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Gehring Co.
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1,890
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$52,920
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Wooderson Co.
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4,830
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43,470
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Kitselton Co.
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1,460
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30,660
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On December 31, 2014, the total fair value of the securities was equal to its cost. In 2015, the following transactions occurred.
July 1 Received $2 per share semiannual cash dividend on Wooderson Co. common stock.
Aug. 1 Received $0.50 per share cash dividend on Gehring Co. common stock.
Sept. 1 Sold 1,449 shares of Wooderson Co. common stock for cash at $8 per share.
Oct. 1 Sold 756 shares of Gehring Co. common stock for cash at $31 per share.
Nov. 1 Received $2 per share cash dividend on Kitselton Co. common stock.
Dec. 15 Received $0.50 per share cash dividend on Gehring Co. common stock.
Dec. 31 Received $2 per share semiannual cash dividend on Wooderson Co. common stock.
At December 31, the fair values per share of the common stocks were: Gehring Co. $30, Wooderson Co. $8, and Kitselton Co. $19.
A. Journalize the 2015 transactions and post to the account Stock Investments. (Use the T-account form.)
B. Prepare the adjusting entry at December 31, 2015, to show the securities at fair value. The stock should be classified as available-for-sale securities.
C. Show the balance sheet presentation of the investments at December 31, 2015. At this date, Turnball Associates has common stock $1,509,700 and retained earnings $1,008,600.