Gator Shoes, Inc., manufactures a line of stylish waterproof footwear. The follo

Question

Gator Shoes, Inc., manufactures a line of stylish waterproof footwear. The following transactions relate to investments in common stock. Assume that the securities are available-for-sale securities. March 1 Purchases 1,800 shares of Power Drive Corporation’s common stock for $50 per share. July 1 Receives a cash dividend of $1.60 per share. October 1 Sells 450 shares of Power Drive Corporation’s common stock for $58 per share. December 31 The fair value of Power Drive Corporation’s common stock is $63 per share.

Record the purchase of common stock..

Record the sale of investments.

Record the sale of investments above recorded amount.

Record adjustment of investments to fair value.

Explanation / Answer

Date Particulars Amount(debit) Amount(credit) March, 01 Investment in stock Dr.                   90,000        To cash                    90,000 (being 1800 shares purchased @ 50 each. Oct-01 Cash Dr. 26100 To investment in Stock 22500 To profit on sale of stock 3600 (being 450 shares of 50 Each sold at 58) Amount($) Sale of investment 26100 Bought of Stock 22500 Sale of investment above recorded amount 3600 Closing No. of Shares 1350 Fair value of each share 63 Adjusted Fair Value of Investment 85050

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