Construction Forms Corporation buys securities to be available for sale when circumstances warrant, not to profit from short-term differences in price and not necessarily to hold debt securities to maturity. The following selected transactions relate to investment activities of Construction Forms whose fiscal year ends on December 31. No investments were held by Construction Forms at the beginning of the year.
| 2013 |
|
| Mar. 2 |
Purchased 1 million Platinum Gauges, Inc., common shares for $30 million, including brokerage fees and commissions.
|
| Apr. 12 |
Purchased $23 million of 10% bonds at face value from Zenith Wholesale Corporation. |
| July 18 |
Received cash dividends of $2 million on the investment in Platinum Gauges, Inc., common shares. |
| Oct. 15 |
Received semiannual interest of $1.15 million on the investment in Zenith bonds. |
| 16 |
Sold the Zenith bonds for $28 million. |
| Nov. 1 |
Purchased 500,000 LTD International preferred shares for $49 million, including brokerage fees and commissions.
|
| Dec. 31 |
Recorded the necessary adjusting entry(s) relating to the investments. The market prices of the investments are $32 per share for Platinum Gauges, Inc., and $92 per share for LTD International preferred shares.
|
| 2014 |
|
| Jan. 23 |
Sold half the Platinum Gauges, Inc., shares for $32 per share. |
| Mar. 1 |
Sold the LTD International preferred shares for $94 per share. |
| 1. |
Prepare the appropriate journal entry for each transaction or event. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)
| Date |
General Journal |
Debit |
Credit |
| March 02, 2013 |
Investment in Platinum Gauges, inc., shares |
30.00 |
|
|
Cash |
|
30.00 |
| April 12, 2013 |
Investment in Zenith bonds |
23.00 |
|
|
Cash |
|
23.00 |
| July 18, 2013 |
Cash |
2.00 |
|
|
Investment revenue |
|
2.00 |
| October 15, 2013 |
Cash |
1.15 |
|
|
Investment Revenue |
|
1.15 |
| October 16, 2013 |
Cash |
28.00 |
|
|
Investment in Zenith bonds |
|
|
| November 01, 2013 |
Investment in LTD preferred shares |
49.00 |
|
|
Cash |
|
49.00 |
| Date |
General Journal |
Debit |
Credit |
| Dec 31, 2013 |
Net unrealized holding gains and losses - OCI |
1.00 |
|
|
Fair value adjustment |
|
1.00 |
| Date |
General Journal |
Debit |
Credit |
| Jan 23, 2014 |
Cash |
16.00 |
|
|
Investment in Platinum Gauges shares |
|
15.00 |
|
Gain on sale of incestments |
|
1.00 |
| Mar 01, 2014 |
Cash |
47.00 |
|
|
Loss on sale of incestment |
2.00 |
|
|
Loss on sale of investment |
|
49.00 |
| 2. |
Show the amounts that would be reported in the company's 2013 income statement relative to these investments. (Enter your answers in millions rounded to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).)
| 2013 Income Statement |
| ($ in millions) |
| Investment revenue |
|
| Gain on sale of investments |
|
| Other comprehensive invome: |
| Net unrealized holding gains (losses) on investments |
1.00 |
|
|