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In January 2012, management of Stefan Company concludes that it has enough cash to allow some short-term investments in debt and stock securities. During the year, the following transactions occurred.

Feb. 1   Purchased 600 shares of Superior common stock for $31,800, plus brokerage fees of $600.
Mar. 1   Purchased 800 shares of Pawlik common stock for $20,000, plus brokerage fees of $400.
Apr. 1    Purchased 50 $1,000, 7% Venice bonds for $50,000, plus $1,000 brokerage fees. Interest is payable semiannually on April 1 and October 1.
July 1    Received a cash dividend of $0.60 per share on the Superior common stock.
Aug. 1   Sold 200 shares of Superior common stock at $58 per share less brokerage fees of $200.
Sept. 1  Received $1 per share cash dividend on the Pawlik common stock.
Oct. 1   Received semiannual interest on the Venice bonds.
Oct. 1   Sold the Venice bonds for $50,000 less $1,000 brokerage fees.

At December 31, the fair value of the Superior common stock was $55 per share. The fair value of the Pawlik common stock was $24 per share.
Instructions

(a)  Journalize the transactions and post to accounts Debt Investments and Stock Investments. (Use the T-account form.)(a) Gain on stock sale $600 use T-account form

(b)  Prepare the adjusting entry at December 31, 2012, to report investment securities at fair value. All securities are considered to be trading securities.

(c)  Show balance sheet presentation of investment securities at December 31, 2012.

(d)  Identify income statement accounts and provide the statement classification of each account.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91863

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