Stoll Co.âs long-term available-for-sale portfolio at December31, 2014, consists of the following.
Available-for-Sale Securities Cost Fair Value 80,000 shares of Company A common stock $ 1,049,600 $ 921,000 48,000 shares of Company B common stock 358,750 348,000 44,000 shares of Company C common stock 1,395,500 1,341,875
Stoll entersinto the following long-term investment transactions during year2015.
Jan. 29 Sold 24,000shares of Company B common stock for $178,375 less a brokerage feeof $3,500. Apr. 17 Purchased 23,000 shares of Company W common stock for $495,000plus a brokerage fee of $4,100. The shares represent a 30%ownership in Company W.
July 6 Purchased 9,000 shares of Company X common stock for $263,125plus a brokerage fee of $4,100. The shares represent a 10%ownership in Company X.
Aug. 22 Purchased 100,000 shares of Company Y common stock for $690,000plus a brokerage fee of $8,900. The shares represent a 51%ownership in Company Y.
Nov. 13 Purchased 13,000 shares of Company Z common stock for $523,800plus a brokerage fee of $6,900. The shares represent a 5% ownershipin Company Z.
Dec. 9 Sold 80,000 shares of Company A common stock for $1,032,500 lessa brokerage fee of $4,100.
The fair valuesof its investments at December 31, 2015, are:
Fair Value B $ 172,750 C $ 1,230,625 W $ 392,500 X $ 246,250 Y $ 1,072,500 Z $ 567,600
Determine the amount Stoll should report on its December 31,2015, balance sheet for its long-term investments inavailable-for-sale securities. and Prepare any necessary December31, 2015, adjusting entry to record the fair value adjustment forthe long-term investments in available-for-sale securities.
My question is how do I calculate to find the cost of fair valueadjustment computation available for sale securities?
Stoll Co.âs long-term available-for-sale portfolio at December31, 2014, consists of the following.
| Available-for-Sale Securities | Cost | Fair Value | ||||
| 80,000 shares of Company A common stock | $ | 1,049,600 | $ | 921,000 | ||
| 48,000 shares of Company B common stock | 358,750 | 348,000 | ||||
| 44,000 shares of Company C common stock | 1,395,500 | 1,341,875 | ||||
| Stoll entersinto the following long-term investment transactions during year2015. |
| Jan. | 29 | Sold 24,000shares of Company B common stock for $178,375 less a brokerage feeof $3,500. | |
| Apr. | 17 | Purchased 23,000 shares of Company W common stock for $495,000plus a brokerage fee of $4,100. The shares represent a 30%ownership in Company W. | |
| July | 6 | Purchased 9,000 shares of Company X common stock for $263,125plus a brokerage fee of $4,100. The shares represent a 10%ownership in Company X. | |
| Aug. | 22 | Purchased 100,000 shares of Company Y common stock for $690,000plus a brokerage fee of $8,900. The shares represent a 51%ownership in Company Y. | |
| Nov. | 13 | Purchased 13,000 shares of Company Z common stock for $523,800plus a brokerage fee of $6,900. The shares represent a 5% ownershipin Company Z. | |
| Dec. | 9 | Sold 80,000 shares of Company A common stock for $1,032,500 lessa brokerage fee of $4,100. |
| The fair valuesof its investments at December 31, 2015, are: |
| Fair Value | ||
| B | $ | 172,750 |
| C | $ | 1,230,625 |
| W | $ | 392,500 |
| X | $ | 246,250 |
| Y | $ | 1,072,500 |
| Z | $ | 567,600 |
Determine the amount Stoll should report on its December 31,2015, balance sheet for its long-term investments inavailable-for-sale securities. and Prepare any necessary December31, 2015, adjusting entry to record the fair value adjustment forthe long-term investments in available-for-sale securities.
My question is how do I calculate to find the cost of fair valueadjustment computation available for sale securities?
Related questions
1) On February 15, Jewel Company buys 7,300 shares of MarceloCorp. common stock at $28.56 per share plus a brokerage fee of$400. The stock is classified as available-for-sale securities.This is the companyâs first and only investment inavailable-for-sale securities. On March 15, Marcelo Corp. declaresa dividend of $1.18 per share payable to stockholders of record onApril 15. Jewel Company received the dividend on April 15 andultimately sells half of the Marcelo Corp. stock on November 17 ofthe current year for $29.33 per share less a brokerage fee of $250.The journal entry to record the dividend on April 15 is:
A) Debit Cash $8,614; credit Dividend Revenue $8,614.
B) Debit Cash $8,614; credit Interest Revenue $8,614.
C) Debit Cash $8,614; credit Gain on Sale of Investments$8,614.
D) Debit Cash $7,865; credit Dividend Revenue $7,865.
E) Debit Cash $7,865; credit Interest Revenue $7,865.
2) On February 15, Jewel Company buys 7,800 shares of MarceloCorp. common at $28.61 per share plus a brokerage fee of $435. Thestock is classified as available-for-sale securities. This is thecompanyâs first and only investment in available-for-salesecurities. On March 15, Marcelo Corp. declares a dividend of $1.23per share payable to stockholders of record on April 15. JewelCompany received the dividend on April 15 and ultimately sells halfof the Marcelo Corp. stock on November 17 of the current year for$29.38 per share less a brokerage fee of $290. The fair value ofthe remaining 3,900 shares is $29.58 per share. The amount thatJewel Company should report in the asset section of its year-endDecember 31 balance sheet for its investment in Marcelo Corp.is:
A) $223,593.
B) $3,566.
C) $115,362.
D) $2,496.
E) $6,681.
3) Six months ago, a company purchased an investment in stockfor $69,000. The investment is classified as available-for-salesecurities. This is the companyâs first and only investment inavailable-for-sale securities. The current fair value of the stockis $72,900. The company should record a:
A) Credit to Investment Revenue for $3,900.
B) Debit to Investment Revenue for $3,900.
C) Debit to Unrealized Loss-Equity for $3,900.
D) No entry is required.
E) Credit to Unrealized Gain-Equity for $3,900.
4) Claymore Corp. has the following information about itsstandards and production activity for September. The volumevariance is:
| Actual total factoryoverhead incurred | $ | 23,880 | ||
| Standard factory overhead: | ||||
| Variable overhead | $ | 5.80 | per unit produced | |
| Fixed overhead | ||||
| ($6,720 / 4,200 estimated unitsto be produced) | $ | 1.60 | per unit | |
| Actual units produced | 2,700 | units | ||
A) $2,400U.
B) $3,900U.
C) $1,500F.
D) $1,500U.
E) $2,400F.
5) Use the following information to calculate cash paid forincome taxes:
| Income TaxExpense | $ | 64,000 | |
| Income Tax Payable, January1 | 23,000 | ||
| Income Tax Payable, December31 | 14,000 |
A) $73,000.
B) $87,000.
C) $78,000.
D) $55,000.
E) $64,000.
6) On February 15, Jewel Company buys 6,100 shares of MarceloCorp. common at $28.72 per share plus a brokerage fee of $490. Thestock is classified as available-for-sale securities. This is thecompanyâs first and only investment in available-for-salesecurities. On March 15, Marcelo Corp. declares a dividend of $1.24per share payable to stockholders of record on April 15. JewelCompany received the dividend on April 15 and ultimately sells halfof the Marcelo Corp. stock on November 17 of the current year for$29.49 per share less a brokerage fee of $345. The fair value ofthe remaining shares is $29.69 per share. The amount that JewelCompany should report in the equity section of its year-endDecember 31 balance sheet for its investment in Marcelo Corp. is(Round your intermediate dollar values to the nearestdollar amount):
A) Unrealized Gain âEquity; $2,714.
B) Realized Gain âEquity; $7,564.
C) Unrealized Gain â Equity; $5,427.
D) Unrealized Loss âEquity; $1,758.
E) Unrealized Gain âEquity; $9,322.
7) On February 15, Jewel Company buys 6,900 shares of MarceloCorp. common stock at $28.64 per share plus a brokerage fee of$450. The stock is classified as available-for-sale securities.This is the companyâs first and only investment inavailable-for-sale securities. On March 15, Marcelo Corp. declaresa dividend of $1.16 per share payable to stockholders of record onApril 15. Jewel Company received the dividend on April 15 andultimately sells half of the Marcelo Corp. stock on November 17 ofthe current year for $29.41 per share less a brokerage fee of $305.The fair value of the remaining shares is $29.61 per share. Theimpact on Jewelâs net income as a result of its investment inMarcelo Corp. was a(n) (Round your intermediate dollarvalues to the nearest dollar amount):
A) Decrease to income of $2,127.
B) Increase to income of $10,131.
C) Increase to income of $3,122.
D) Decrease to income of $8,004.
E) Increase to income of $5,565.
Selected transactions completed by Equinox Products Inc. duringthe fiscal year ended December 31, 2016, were as follows:
Record on journal page 10:
| Jan. | 3 | Issued 15,000 shares of $20 parcommon stock at $30, receiving cash. |
| Feb. | 15 | Issued 4,000 shares of $80 parpreferred 5% stock at $100, receiving cash. |
| May | 1 | Issued $500,000 of 10-year, 5%bonds at 104, with interest payable semiannually. |
| 16 | Declared a dividend of $0.50 pershare on common stock and $1.00 per share on preferred stock. Onthe date of record, 100,000 shares of common stock wereoutstanding, no treasury shares were held, and 20,000 shares ofpreferred stock were outstanding. Journalize this transactionas a single entry. | |
| 26 | Paid the cash dividends declared onMay 16. | |
| Jun. | 1 | Purchased 7,500 shares of SolsticeCorp. at $40 per share, plus a $150 brokerage commission. Theinvestment is classified as an available-for-sale investment. |
| 8 | Purchased 8,000 shares of treasurycommon stock at $33 per share. | |
| 22 | Purchased 40,000 shares ofPinkberry Co. stock directly from the founders for $24 per share.Pinkberry has 125,000 shares issued and outstanding. EquinoxProducts Inc. treated the investment as an equity methodinvestment. | |
| 30 | Declared a $1.00 cash dividend pershare on preferred stock. On the date of record, 20,000 shares ofpreferred stock were outstanding. | |
| Jul. | 11 | Paid the cash dividends declared onJul. 11 to the preferred stockholders. |
| Aug. | 27 | Received $27,500 dividend fromPinkberry Co. investment of Jun. 22. |
Record on journal page 11:
| Oct. | 1 | Purchased $90,000 of Dream Inc.10-year, 5% bonds, directly from the issuing company, at their faceamount plus accrued interest of $375. The bonds are classified as aheld-to-maturity long-term investment. |
| 7 | Sold, at $38 per share, 2,600shares of treasury common stock purchased on Jun. 8. | |
| 14 | Received a dividend of $0.60 pershare from the Solstice Corp. investment on Jun. 1. | |
| 29 | Sold 1,000 shares of Solstice Corp.at $45, including commission. | |
| 31 | Recorded the payment of semiannualinterest on the bonds issued on May 1 and the amortization of thepremium for six months. The amortization is determined using thestraight-line method. | |
| Dec. | 31 | Accrued interest for three monthson the Dream Inc. bonds purchased on Oct. 1. |
| 31 | Pinkberry Co. recorded totalearnings of $240,000. Equinox Products recorded equity earnings forits share of Pinkberry Co. net income. | |
| 31 | The fair value for Solstice Corp.stock was $39.02 per share on December 31, 2016. The investment isadjusted to fair value, using a valuation allowance account. AssumeValuation Allowance for Available-for-Sale Investments had abeginning balance of zero. |
| Required: | |||||||||
| 1. | Journalize the selectedtransactions. Refer to the Chart of Accounts for exact wording ofaccount titles. | ||||||||
| 2. | After all of the transactionsfor the year ended December 31, 2016, had been posted [includingthe transactions recorded in part (1) and all adjusting entries],the data that follows were taken from the records of EquinoxProducts Inc.
|
| Income Statement data: | |
|---|---|
| Advertising expense | $150,000 |
| Cost of merchandise sold | 3,700,000 |
| Delivery expense | 30,000 |
| Depreciation expense-officebuildings and equipment | 30,000 |
| Depreciation expense-storebuildings and equipment | 100,000 |
| Dividend revenue | 4,500 |
| Gain on sale of investments | 4,980 |
| Income from Pinkberry Co.investment | 76,800 |
| Income tax expense | 140,500 |
| Interest expense | 21,000 |
| Interest revenue | 2,720 |
| Miscellaneous administrativeexpense | 7,500 |
| Miscellaneous selling expense | 14,000 |
| Office rent expense | 50,000 |
| Office salaries expense | 170,000 |
| Office supplies expense | 10,000 |
| Sales | 5,254,000 |
| Sales commissions | 185,000 |
| Sales salaries expense | 385,000 |
| Store supplies expense | 21,000 |
| Retained earnings and balancesheet data: | |
|---|---|
| Accounts payable | $194,300 |
| Accounts receivable | 545,000 |
| Accumulated depreciationâofficebuildings and equipment | 1,580,000 |
| Accumulated depreciationâstorebuildings and equipment | 4,126,000 |
| Allowance for doubtfulaccounts | 8,450 |
| Available-for-sale investments (atcost) | 260,130 |
| Bonds payable, 5%, due 2024 | 500,000 |
| Cash | 246,000 |
| Common stock, $20 par | |
| (400,000 shares authorized; 100,000shares issued, 94,600 outstanding) | 2,000,000 |
| Dividends: | |
| Cash dividends for commonstock | 155,120 |
| Cash dividends for preferredstock | 100,000 |
| Goodwill | 500,000 |
| Income tax payable | 44,000 |
| Interest receivable | 1,125 |
| Investment in Pinkberry Co. stock(equity method) | 1,009,300 |
| Investment in Dream Inc. bonds(long term) | 90,000 |
| Merchandise inventory (December 31,2016), | |
| at lower of cost (FIFO) ormarket | 778,000 |
| Office buildings and equipment | 4,320,000 |
| Paid-in capital from sale oftreasury stock | 13,000 |
| Excess of issue price overpar: | |
| -Common | 886,800 |
| -Preferred | 150,000 |
| Preferred 5% stock, $80 par | |
| (30,000 shares authorized; 20,000shares issued) | 1,600,000 |
| Premium on bonds payable | 19,000 |
| Prepaid expenses | 27,400 |
| Retained earnings, January 1,2016 | 9,319,725 |
| Store buildings and equipment | 12,560,000 |
| Treasury stock | |
| (5,400 shares of common stock atcost of $33 per share) | 178,200 |
| Unrealized gain (loss) onavailable-for-sale investments | (6,500) |
| Valuation allowance foravailable-for-sale investments | (6,500) |
