On December 31, 2020, Turnball Associates owned the following securities held as a long-term investment. The securities are not held for influence or control of the investee.
| Common Stock | Shares | Cost |
| Gehring Co. | 2,000 | $60,000 |
| Wooderson Co. | 5,000 | 45,000 |
| Kitselton Co. | 1,500 | 30,000 |
On December 31, 2020, the total fair value of the securities was equal to its cost. In 2021, the following transactions occurred.
| Aug. 1 | Received $0.50 per share cash dividend on Gehring Co. common stock |
| Sept. 1 | Sold 1,500 shares of Wooderson Co. common stock for cash at $8 per share |
| Oct. 1 | Sold 800 shares of Gehring Co. common stock for cash at 433 per share |
| Nov. 1 | Received $1 per share cash dividend on Kitselton Co. common stock |
| Dec. 15 | Received $0.50 per share cash dividend on Gehring co. Common Stock |
| 31 | Received $1 per share annual cash dividend on Wooderson Co. Common Stock. |
At December 31, the fair value per share of the common stocks were Gehring Co. $32, Wooderson Co. $8, and Kitselton Co. $18
Instructions
- Journalize the 2021 transactions and post to the account Stock Investments. (Use T-Account form.)
- Prepare the adjusting entry at December 31, 2021, to show the securities at fair value. The stock should be classified as available-for-sale securities..
- Show the balance sheet presentation of investment securities at December 31, 2021. At this date, Turnball Associates has common stock $1,500,000 and retained earnings $1,000,000.
Solution
a.
Turnball Associates
Journal Entries
Journal Entries
b.
