You are working for The Wellington Company on temporary assignment while one of
ID: 2411393 • Letter: Y
Question
You are working for The Wellington Company on temporary assignment while one of the accountants is on family leave. You have been asked to review the company’s investment
The balance sheet caption used to report long-term investments in stocks not intended as a source of cash in the normal operations of the business.
journal entries and provide necessary information to the accountant preparing the financial statements.
PAGE 8
JOURNAL
1
Jan. 17
Investment-Red Rock Co. Stock
37,400.00
2
Cash
37,400.00
3
Feb. 5
Investment-Sunset Village Bonds
34,000.00
4
Interest Receivable
290.00
5
Cash
34,290.00
6
23
Investment-Mays and Co. Stock
25,500.00
7
Cash
25,500.00
8
Mar. 31
Cash
340.00
9
Interest Receivable
290.00
10
Interest Revenue
50.00
11
Apr. 6
Investment in Minions Corp. Stock
170,000.00
12
Cash
170,000.00
13
30
Cash
750.00
14
Dividend Revenue
750.00
15
Jul. 1
Cash
18,162.00
16
Loss on Sale of Investments
2,448.00
17
Interest Revenue
210.00
18
Investment-Sunset Village Bonds
20,400.00
19
Aug. 14
Cash
41,300.00
20
Gain on Sale of Investments
1,800.00
21
Investment-Harding Construction Stock
39,500.00
22
27
Cash
3,400.00
23
Investment in Minions Corp. Stock
3,400.00
24
Sep. 22
Cash
29,000.00
25
Gain on Sale of Investments
3,500.00
26
Investment-Mays and Co. Stock
25,500.00
27
30
Cash
130.00
28
Interest Revenue
130.00
29
Nov. 1
Investment in Minions Corp. Stock
15,300.00
30
Income of Minions Corp.
15,300.00
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
The accountant preparing the financial statements has asked you to provide the fair value as of the end of the year for the investments. Present the information as it would be shown on the financial statements. Last year, The Wellington Company reported costs of $68,000 in trading investments and $82,000 in available-for-sale investments. Refer to the journal entries shown on The Wellington Company panel. Assume that all investments sold during this year were trading investments and that purchases during the year were new investments.
DATE DESCRIPTION POST. REF. DEBIT CREDIT1
Jan. 17
Investment-Red Rock Co. Stock
37,400.00
2
Cash
37,400.00
3
Feb. 5
Investment-Sunset Village Bonds
34,000.00
4
Interest Receivable
290.00
5
Cash
34,290.00
6
23
Investment-Mays and Co. Stock
25,500.00
7
Cash
25,500.00
8
Mar. 31
Cash
340.00
9
Interest Receivable
290.00
10
Interest Revenue
50.00
11
Apr. 6
Investment in Minions Corp. Stock
170,000.00
12
Cash
170,000.00
13
30
Cash
750.00
14
Dividend Revenue
750.00
15
Jul. 1
Cash
18,162.00
16
Loss on Sale of Investments
2,448.00
17
Interest Revenue
210.00
18
Investment-Sunset Village Bonds
20,400.00
19
Aug. 14
Cash
41,300.00
20
Gain on Sale of Investments
1,800.00
21
Investment-Harding Construction Stock
39,500.00
22
27
Cash
3,400.00
23
Investment in Minions Corp. Stock
3,400.00
24
Sep. 22
Cash
29,000.00
25
Gain on Sale of Investments
3,500.00
26
Investment-Mays and Co. Stock
25,500.00
27
30
Cash
130.00
28
Interest Revenue
130.00
29
Nov. 1
Investment in Minions Corp. Stock
15,300.00
30
Income of Minions Corp.
15,300.00
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
Explanation / Answer
Assumed that all purchases and sales are of Trading Securities only as provided.
Trading Securities: Debit amount $ Credit amount $ ob 68000 20400 37400 39500 34000 25500 25500 cb 79500 164900 164900 Available for sale investments: Debit amount $ Credit amount $ ob 82000 cb 82000 82000 82000 Investment in Equity: Debit amount $ Credit amount $ 170000 3400 15300 cb 181900 185300 185300Related Questions
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