P16-3A Journalize transactions and adjusting entry for stock investments

On December 31, 2017, Turnball Associates owned the following securities, held as a long-term
investment. The securities are not held for influence or control of the investee.

Common Stock Shares

Gehring Co. 2,000
Wooderson Co. 5,000
Kitselton Co. 1,500 `

On December 31, 2017, the total fair value of the securities was equal to its cost. In 2018,
the following transactions occurred.
July 1 Received $1 per share semiannual cash dividend on Wooderson Co. common stock.
Aug.1 Received $0.50 per share cash dividend on Gehring Co. common stock.
Sept. 1 Sold 1,500 shares of Wooderson Co. common stock for cash at $8 per share.
Oct. 1 Sold 800 shares of Gehring Co. common stock for cash at $33 per share.
Nov. 1 Received $1 per share cash dividend on Kitselton co. common stock.
Dec. 15 Received $0.50 per share cash dividend on Gehring co. common stock.
Dec.31 Received $1 per share semiannual cash dividend on Wooderson Co. common stock.

At December 31, the fair values per share of the common stocks were: Gehring Co. $32,
Wooderson Co. $8, and Kitselton Co. $18.

Instructions
(a) Journalize the 2018 transactions and post to the account Stock Investments.
(Use the T-account form.)
(b) Prepare the adjusting entry at December 31, 2018, to show the securities at
fair value. The stock should be classified as available-for-sale securities.
(c ) Show the balance sheet presentation of the investments at December 31, 2018.
At this date, Turnball Associates has common stock $1,500,000 and retained
earnings $1,000,000.

A Date Account Titles Debit Credit

Jul-01 Cash ($1 x 5.000) 5,000
Dividend Revenue 5,000
Aug-01 Cash ($0,50 x 2.000) 1,000
Dividend Revenue 1,000
Sep-01 Cash 12,000
Loss on Sale of Share Investment 1,500
Stock Investment 13,500
Oct-01 Cash 26,400
 Gain on Sale of Share Investment 2,400
Stock Investment 24,000
Nov-01 Cash ($1 x1.500) 1,500
Dividend Revenue 1,500
Dec-15 Cash ($0.50 x 1.200) 600
Dividend Revenue 600
Dec-01 Cash ($1 x3.500) 3,500
Dividend Revenue 3,500

Stock Investment
Jan. 1 $135,000 Sep. 1 $13,500
Oct. 1 $24,000

Dec. 1 $97,500

Trading Securities, December 31, 2018

B Commons StockCost Fair Value Unrelize gain

(Loss)
Gehring Co. $36,000 $38,400 $2,400
Wooderson Co. 31,500 28,000 -3,500
Kitselton Co. 30,000 27,000 -3,000
$97,500 $93,400 -$4,100

Dec-31 Unrealized Gain or Loss-Equity 4,100

Fair value Adjustment- Available for Sale 4,100

C Turnball Associates
Balance Sheet (partial)
December 31, 2018
Assets
Investment
Investment in shares of less than 20% $93,400
owned companies, at fair value
Total Assets $93,400

Equity
Common stock 1500000
Retained earnings 1000000
Accumulated other comprehensive loss -4,100
Total equity $2,495,900
eld as a long-term

Cost
$60,000
45,000
30,000

ost. In 2018,

common stock.

common stock.

g Co. $32,

31, 2018.