Tampa today publishers completed the following trading investment transactions d

Question

Tampa today publishers completed the following trading investment transactions during 2014 and 2015. dec 6 purchased 950 shares of golden stock at a price of $25per share, intending to sell the investment next month. dec 23 received a cash dividend of $1.30 per share on the golden stock. dec 31 adjusted the investment to its market value of $20. per share. jan 27 2015 sold th golden stock for $22 per share. Journalize the transactions. on dec 31, 2014 how would the golden stock be classified and at what value would it be reported on the balance sheet?

Explanation / Answer

1) Loss due to fall in market value    4750                            [950 *(25-20) ]

   Investment in Golden stock              4750

[being stock are marked to market ]

2)Golden would classified such stock as short term investment in balance sheet as on balance sheet date they are likely to be sold within 1 year

3) Value of investment on balance sheet date = 950 *20 =$ 19000

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