Investment and fair value adjustment
Not what you're looking for?
Please help with the attached two questions.
Instructions - Journalize transactions for investments in stocks.
Q.1.) Hermes Inc. had the following transactions pertaining to investments in common stock.
Jan. 1 Purchased 2,000 shares of Lanier Corporation common stock (5%) for $140,000 cash plus $2,100 broker's commission.
July 1 Received a cash dividend of $3 per share.
Dec 1 Sold 500 shares of Lanier Corporation common stock for $37,000 cash, less $800 broker's commission.
Dec 31 Received a cash dividend of $3 per share.
Q.2) Instructions -
a. Prepare the adjusting entry at December 31, 2006, to report the securities at fair value.
b. Show the balance sheet and income statement presentation at December 31, 2006, after adjustment to fair value.
At December 31, 2006, the trading securities for Jeng. Inc. are as follows:
Security Cost Fair Value
A $17,500 $16,000
B $12,500 $14,000
C $23,000 $17,000
$53,000 $47,000
Purchase this Solution
Solution Summary
The solution explains the journal entries for investment in securities and the fair value adjustment for securities.
Solution Preview
Instructions - Journalize transactions for investments in stocks.
Q.1.) Hermes Inc. had the following transactions pertaining to investments in common stock.
Jan. 1 Purchased 2,000 shares of Lanier Corporation common stock (5%) for $140,000 cash plus $2,100 broker's commission.
Jan 1 Investment Dr 142,100
Cash Cr 142,100
The cost of broker commission is added to the cost of investment. The cost per share is 142,100/2,000=$71.05
July 1 Received a cash dividend of $3 per ...
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.