On December 31, 2011, Walden owned the following securities thatare held as a long-term investment. The securities are not held forinfluence or control of the investee.
CommonStock Shares Cost
XCo. 2,000 $90,000
YCo. 5,000 45,000
ZCo. 1,500 30,000
On this date, the total fair value of the securities was equalto its cost. In 2012, the following transactions occurred:
July 1 Received $1per share semiannual cash dividend on Y Co. Common Stock.
8 Received 4,000 shares of X Co. Common Stock in a 3 for 1 stocksplit.
Required
(a) Journalize the twotransactions above. If no journal entry is required put N/A next tothe date.
July 1
July 8
(b) Assuming at December 31, 2011(Ignore 2012 activity) the fair values per share of the commonstocks were: X Co. $10, Y Co. $8, and Z Co. $5 prepare theadjusting entry to show the securities at fair value assuming theyare classified as “available-for-sale securities”.
(c) Indicate where anyunrealized gain/loss would be reported (Income Statement or BalanceSheet?).
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