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The following are in Colt Companys portfolio of long-term available-for-sale
securities at December 31, 2016.
Total Cost
500 shares of Bonds Corporation common stock $26,000
700 shares of Penn Corporation common stock 42,000
600 shares of Gibbens Corporation preferred stock 16,800
On December 31, the total cost of the portfolio equaled total fair value. Colt Company had
the following transactions related to the securities during 2017.
Jan. 7: Sold 500 shares of Bonds Corporation common stock at $56 per share.
Jan. 10: Purchased 200 shares, $70 par value common stock of Wellnitz Corporation at $78 per share.
Jan. 26: Received a cash dividend of $1.15 per share on Penn Corporation common stock.
Feb. 2: Received cash dividends of $0.40 per share on Gibbens Corporation preferred stock.
Feb. 10: Sold all 600 shares of Gibbens Corporation preferred stock at $26 per share.
Jul. 1: Received a cash dividend of $1.00 per share on Penn Corporation common stock.
Sep. 1: Purchased an additional 600 shares of the $70 par value common stock of Wellnitz Corporation at $75 per share.
Dec. 15: Received a cash dividend of $1.75 per share on Wellnitz Corporation common stock.
At December 31, 2017, the fair values of the securities were:
Penn Corporation common stock: $63 per share
Wellnitz Corporation common stock: $72 per share
At December 31, 2017, Colt Companys Total paid-in capital and retained earnings amounted to $10,000
Instructions
(a) Prepare journal entries to record the transactions.
(b) Post to the investment accounts. (Use T accounts.)
(c) Prepare the adjusting entry at December 31, 2015, to report the portfolio at fair value.
(d) Show the balance sheet presentation at December 31, 2017.
Answer & Explanation
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