Weygandt, Financial & Managerial Accounting, 2e Help | System Announcements (1 U

Question

Weygandt, Financial & Managerial Accounting, 2e Help | System Announcements (1 Unread) Problem 12-5A following securities are in Frederick Company's portfolio of long-term available-for-sale securities at December 31, 2017. Cost 1,300 shares of Willhite Corporation common stock 1.300 shares of Hutcherson Corporation common 1,350 shares of Downing Corporation preferred stock $65,000 83,200 36,450 On December 31, 2017, the total cost of the portfolio equaled total fair value. Frederick had the folowing transactions related to the securi Jan. 20 Sold all 1,300 shares of Wilhite Corporation common stock at s53 per share shares of $72 par value common stock of Liggett Corporation at $80 per share 28 30 Purchased 300 Received a cash dividend of $1.36 per share on Hutcherson Corporation common stock ived cash dividends of $0.67 per share on Downing Corporation preferred stock. Sold ali 1,350 shares of Downing Corp, preferred stock at 526 per share. 18 July 30 Receiv Sept. 6 Purchased an additional 900 shares of $13 par value common stock of Liggett Corporation at $84 per share ed a cash dividend of $1.00 per share on Hutcherson Corporation common stock Received a cash dividend of $1:29 per share on Liggett Corporation common stock At December 31, 2018, the fair vales Hutcherson Corporation common stock Liggett Corporation common stock of the securities were $68 per share 574 per share

Explanation / Answer

a Date Account Titles & Explanation Debit $ Credit $ Jan 20 Cash $        68,900 Gain on sale of stock investments $          3,900 Stock Investments $        65,000 Jan 28 Stock investments $        24,000 Cash $        24,000 Jan 30 Cash $          1,768 Dividend Revenue $          1,768 Feb 8 Cash $              905 Dividend Revenue $              905 Feb 18 Cash $        35,100 Loss on sale of Stock Investments $          1,350 Stock Investments $        36,450 Jul 30 Cash $          1,300 Dividend Revenue $          1,300 Sep 6 Stock Investments $        75,600 Cash $        75,600 Dec 1 Cash $          1,536 Dividend Revenue $          1,536 b Stock Investments 1/1 Bal. $                                                         184,650 1/20 $        65,000 1/28 $                                                            24,000 2/18 $        36,450 9/6 $                                                            75,600 12/31 Bal. $                                                         182,800 c Date Account Titles & Explanation Debit $ Credit $ Dec 31 Unrealized Gain or Loss—Equity $          5,600 ($182,800 – $177,200) Market Adjustment—Available for- Sale $          5,600 Security Cost Fair Value Hutcherson $        83,200 $        88,400 (1300 x $68) Liggett $        99,600 $        88,800 (1200 x $74) $     182,800 $     177,200 d Frederick Company Baance Sheet (Partial) Investments Investment in stock of less than 20% owned companies, at fair value $     177,200 Stockholders’ equity Common stock Retained earnings Total paid-in capital and retained earnings xxxx Less: Unrealized loss on available for- sale securities $          5,600 Total stockholders’ equity xxxx

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