Question

PH.3 (LO 2, 3) On December 31, 2021, the end of its first year of operations, Botani Associates owned the following securities that are held as long-term investments. Unrealized gain of $3,300.

Common Stock Shares Cost
C Co. 1,000 $48,000
D Co. 5,000 36,000
E Co. 1,200 24,000

On this date, the total fair value of the securities was equal to its cost. The securities are not held for influence or control over the investees. In 2022, the following transactions occurred.

July 1 Received $2.00 per share semiannual cash dividend on D Co. common stock.
Aug. 1 Received $0.50 per share cash dividend on C Co. common stock.
Sept. 1 Sold 1,000 shares of D Co. common stock for cash at $9 per share.
Oct. 1 Sold 300 shares of C Co. common stock for cash at $53 per share.
Nov. 1 Received $1 per share cash dividend on E Co. common stock.
Dec. 15 Received $0.50 per share cash dividend on C Co. common stock.
31 Received $2.20 per share semiannual cash dividend on D Co. common stock.

At December 31, the fair values per share of the common stocks were C Co. $47, D Co. $7, and E Co. $24. These investments should be classified as long-term. Instructions

a. Journalize the 2022 transactions and post to the account Stock Investments. (Use the T-account form.)

b. Prepare the adjusting entry at December 31, 2022, to show the securities at fair value. Botani has less than a 20% ownership interest in all these common stocks (C Co., D Co., and E Co.)

.****** c. Show the balance sheet presentation of the investments at 2022. These investments should be classified as long-term. Paul D. Kimmel. Accounting: Tools for Business Decision Making, 7th Edition (p. H-18).

Answer 1