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Investments, Stocks, Shares and Dividends

P17-11 (Equity Investments?Available for Sale) Big Brother Holdings, Inc. had the following available-for-sale investment portfolio at January 1, 2002.

Earl Company 1,000 shares @ $15 each $15,000
Josie Company 900 shares @ $20 each 18,000
David Company 500 shares @ $9 each 4,500
Available-for sale securities @ cost 37,500
Securities fair value adjustment?Available-for-sale (7,500)

Available-for-sale securities @ fair value $30,000

During 2002, the following transactions took place.
1. On March 1, Josie Company paid a $2 per share dividend.

2. On April 30, Big Brother Holdings, Inc. sold 300 shares of David Company for $10 per share.

3. On May 15, Big Brother Holdings, Inc. purchased 50 more shares of Earl Co. stock at $16 per share.

4. At December 31, 2002, the stocks had the following price per share values: Earl $17, Josie $19, and David $8.

During 2003, the following transactions took place.

5. On February 1, Big Brother Holdings, Inc. sold the remaining David shares for $7 per share.

6. On March 1, Josie Company paid a $2 per share dividend.

7. On December 21, Earl Company declared a cash dividend of $3 per share to be paid in the next
month.

8. At December 31, 2003, the stocks had the following price per shares values: Earl $19 and Josie $21.

Instructions

(a) Prepare journal entries for each of the above transactions.

(b) Prepare a partial balance sheet showing the Investments account at December 31, 2002 and 2003.

Solution Summary

Investments, Stocks, Shares and Dividends are investigated. The solution is detailed and well presented. The response was given a rating of "5/5" by the student who originally posted the question.

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