Problem
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 December 2016 and the first week of 2017.
2016
Dec. 17 Purchased 135,000 Grocers' Supply Corporation preferred shares for $607,500.
28 Received cash dividends of $3,400 from the Grocers' Supply Corporation preferred shares.
31 Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation preferred shares. The market price of the stock was $5 per share.
2017
Jan. 5 Sold the Grocers' Supply Corporation preferred shares for $641,250.
Required:
1. Prepare the appropriate journal entry for each transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Purchased 135,000 Grocers' Supply Corporation preferred shares for $607,500.
Received cash dividends of $3,400 from the Grocers' Supply Corporation preferred shares.
Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation preferred shares. The market price of the stock was $5 per share.
Sold the Grocers' Supply Corporation preferred shares for $641,250.
Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation preferred shares. The market price of the stock was $5 per share.
2. Indicate any amounts that Rantzow-Lear Company would report in its 2016 balance sheet and income statement as a result of this investment.