In January 2014, the management of Stefan Company concludes that it has sufficie

Question

In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit 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 a $1 per share cash dividend on the Pawlik common stock. Oct. 1 Received the 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. In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit 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 a $1 per share cash dividend on the Pawlik common stock. Oct. 1 Received the 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. Date Account Titles and Explanation Debit Credit Feb. 1 Mar. 1 Apr. 1 July 1 Aug. 1 Sept. 1 Oct. 1 Oct. 1 Stock Investments Debt Investments Open Show Work Problem 12-2A (Part Level Submission) In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit 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 a $1 per share cash dividend on the Pawlik common stock. Oct. 1 Received the 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. In January 2014, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred. 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. Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.)

Explanation / Answer

Feb.1
Stock Investments ........$32400
Cash .........................$32400

Mar.1
Stock Investments ........$20400
Cash ...........................$20400

Apr.1
Debt Investments ..........$51000
Cash............................$51000

Jul.1
Cash ..............$360
Dividend Revenue....$360

Aug.1
Cash........................$11400
Stock Investments.......................$10800
Gain on sale of stock investments..$600

Sept.1
Cash..........$800
Dividend Revenue....$800

Oct.1
Cash...........$1750
Interest Revenue......$1750

Oct.1
Cash (Debit) $49000
Loss on sale of debt investments(Debit) $2000
Debt investments (credit) $51000



Stock Investments

Debit (on the right side)
Feb.1 $32400
Mar.1 $20400

Credit (on the left side)
Aug.1 $10800

Balance

Debit (on the right side)
Dec.31 42000



Debt Investments

Debit
Apr.1 $51000

Credit
Oct.1 $51000

Balance

Debit
Dec.31 $0



Adjusting entries at Dec.31 2008 to report the investment securities at fair value:

Dec.31
Unrealized loss-income..................$800
Market adjustment-Trading............$800


Balance sheet presentation of investment securities Dec.31, 2008:

Current Assets
Short ter investments, at fair value $41200

Classification of each account for the income statement accounts:

Interest revenue: other revenue and gains
Loss on sale of investments: other expenses and losses
Dividend revenue: other revenue and gains
Gain on sale of investments: other revenue and gains
Unrealized loss-income: other expenses and losses
Unrealized gain-income: other revenue and gains

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.