Question

posting for sec times any incomplete work will bereported answer all 2 parts investment 1 to 7 and finacial statmentand valution 1 to 6

You are working for The Wellington Company on temporaryassignment while one of the accountants is on family leave. Youhave been asked to review the company’s investment journal entriesand provide necessary information to the accountant preparing thefinancial statements.

PAGE 8

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST.REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1	Jan. 17	Investments-Red Rock Co. Stock		38,500.00		?
2		Cash			38,500.00	?
3	Feb. 5	Investments-Sunset Village Bonds		35,000.00		?
4		Interest Receivable		300.00		?
5		Cash			35,300.00	?
6	23	Investments-Mays and Co. Stock		26,250.00		?
7		Cash			26,250.00	?
8	Mar. 31	Cash		350.00		?
9		Interest Receivable			300.00	?
10		Interest Revenue			50.00			?
11	Apr. 6	Investment in Minions Corp. Stock		175,000.00		?
12		Cash			175,000.00	?
13	30	Cash		750.00		?
14		Dividend Revenue			750.00			?
15	Jul. 1	Cash		18,690.00		?
16		Loss on Sale of Investment		2,520.00				?
17		Interest Revenue			210.00			?
18		Investments-Sunset Village Bonds			21,000.00	?
19	Aug. 14	Cash		41,300.00		?
20		Gain on Sale of Investments			1,800.00			?
21		Investments-Harding Construction Stock			39,500.00	?
22	27	Cash		3,500.00		?
23		Investment in Minions Corp. Stock			3,500.00	?
24	Sep. 22	Cash		29,750.00		?
25		Gain on Sale of Investments			3,500.00			?
26		Investments-Mays and Co. Stock			26,250.00	?
27	30	Cash		140.00		?
28		Interest Revenue			140.00			?
29	Nov. 1	Investment in Minions Corp. Stock		15,750.00		?
30		Income of Minions Corp.			15,750.00			?
31	Dec. 31	Unrealized Loss on Available-For-Sale Investments		3,275.00				?
32		Valuation Allowance for Available-For-Sale Investments			3,275.00	?
33	31	Valuation Allowance for Trading Investments		2,150.00		?
34		Unrealized Gain on Trading Investments			2,150.00			?

Investments

Review the journal entries on The Wellington Company panel thenanswer the following questions.

1.	Which item is likely to be atrading security? Mays and Co. Why?
2.	How are brokerage commission feestreated on stock sales vs. stock purchases?
3.	Based on these journal entries,what is the company’s investment in Sunset Village bonds at the endof the year?
4.	The journal entry on Aug. 27 mostlikely shows
5.	As an investment, bonds are alwayscategorized as
6.	What is the company’s investment inMinions Corp. at the end of the year?

7. Which of the following investments are likely to beavailable-for-sale securities? Check all that apply.

Harding Construction stock

Mays and Co. stock

Cannot be determined

Red Rock Co. stock

Sunset Village bonds

Minions Corp. stock

Financial Statements and Valuation

The accountant preparing the financial statements has asked youto provide the fair value as of the end of the year for theinvestments. Present the information as it would be shown on thefinancial statements. Last year, The Wellington Company reportedcosts of $68,000 in trading investments and $82,000 inavailable-for-sale investments. Refer to the journal entries shownon The Wellington Company panel. Assume that all investments soldduring this year were trading investments and that purchases duringthe year were new investments.

1. Select the correct label for each line and fill in theamount. In classifying the investments, choose a categorizationwhich seems most likely, given the pattern of transactions in thejournal entries. Enter all amounts as positive numbers. If anamount box does not require an entry, leave it blank.

Trading Securities

Available-For-Sale Securities

	2. Where on the balance sheet dotrading securities appear?
	3. Where is the gain or loss fromthe change in value of available-for-sale securities reported inthe financial statements?
	4. Where are held-to-maturitysecurities reported? Based on the journal entries for this year,does the company have any held-to-maturity securities?
	5. Where are securities held forstrategic reasons reported in the financial statements when usingthe equity method? Based on the journal entries for this year, doesThe Wellington Company have any equity securities?

6. Which of the following items does not affect net income?Check all that apply.

only unrealized gains or losses for all investments

realized loss on available-for-sale securities

realized gain on trading securities

none of these answers is correct

both gains and losses of any sort for all investments

unrealized loss on trading securities

unrealized gain on available-for-sale securities