Question

Headland, Inc. had the following equity investment portfolio at January 1, 2020.

Evers Company 950 shares @ $16 each $15,200

Rogers Company 910 shares @ $20 each 18,200

Chance Company    480 shares @ $8 each 3,840

Equity investments @ cost    37,240

Fair value adjustment    (7,240 )

Equity investments @ fair value $30,000

During 2020, the following transactions took place.

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

2. On April 30, Headland, Inc. sold 280 shares of Chance Company for $10 per share.

3. On May 15, Headland, Inc. purchased 90 more shares of Evers Company stock at $17 per share.

4. At December 31, 2020, the stocks had the following price per share values: Evers $18, Rogers $19, and Chance $7.

During 2021, the following transactions took place.

5. On February 1, Headland, Inc. sold the remaining Chance shares for $7 per share.

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

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

8. At December 31, 2021, the stocks had the following price per share values: Evers $20 and Rogers $21.

Prepare journal entries for each of the above transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No. Account Titles and Explanation Debit    Credit

(1)________________________________    ___________________ ________________

___________________________________ ____________________ ________________

(2) _________________________________    ____________________ __________________

   _________________________________    ______________________ _____________________

   _______________________________    ______________________ _____________________

(3) _________________________________ _____________________    ____________________

________________________________ ______________________ ___________________

(4) _____________________________    ______________________ _______________________

   ______________________________    ______________________    _____________________

(5) _______________________________    ______________________    ______________________

______________________________    _______________________ _____________________

_____________________________ ________________________    _______________________

(6) ____________________________    _______________________    ________________________

   ____________________________    _________________________ _______________________

(7) ______________________________    __________________________ _________________________

____________________________    __________________________    ___________________________   

(8) ______________________________    _________________________    _________________________

   _______________________________ _________________________ _____________________________

Prepare a partial balance sheet showing the investment-related amounts to be reported at December 31, 2020 and 2021.

   Headland, Inc.

Balance Sheet (Partial)

_________________    December 31, 2020 December 31, 2021

___________________    $____________    $ __________

_____________________

_______________________    _____________________    _____________

Answer 1

Credit Debit 1,820.00 1,820.00 2,800.00 560.00 2,240.00 Date Account Titles and Explanation 1 March 01, 2020 Cash Dividend Revenue (910 X $2) (To record dividend received from Rogers Company) 2 April 30, 2020 Cash Gain on Sale of Invoice (280 X 2) Equity Investments (Avail for Sale) (280 X 8) (To record sale of investment in Chance Company) 3 May 15, 2020 Equity Investments Avail for Sale) (90 X $17) Cash (To record acquisition of Ever Company stock) 4 December 31, 2020 Fair Value Adjustments (Avail for Sale) (Note 1) Unrealized Holding (Gain or Loss) Equity (To record unrealized gain) 1,530.00 1,530.00 8,120.00 8,120.00 Credit Debit 1,400.00 200.00 1,600.00 1,820.00 1,820.00 Date Account Titles and Explanation 5 February 01, 2021 Cash (200 x $7) Loss on sale of investment Equity Investments (Avail for Sale) (To record sale of Chance Company stock for loss) 6 March 01, 2021 Cash Dividend Revenue (910 X $2) (To record dividend received from Rogers Company) 7 December 21, 2021 Dividends Receivable ((950 + 90) X 3) Dividend Revenue (To record dividend receivable from Ever Company) 8 December 31, 2021 Fair Value Adjustments (Avail for Sale) Unrealized Holding (Gain or Loss) Equity (To record unrealized gain) 3,120.00 3,120.00 4,100.00 4,100.00 Notes: 1) Cost Fair Value Evers Company ($15,200 + 1530) | ((950+90) X $18) Rogers Company (910 X $20) H (910 X $19) Chance Company ($3840 - 2240) || ((480 - 280) X $7) Total Less: Previous securities fair value adjustment bal.Cr Securities fair value adjustment-Dr. 16,730.00 18,200.00 1,600.00 36,530.00 18,720.00 17,290.00 1,400.00 37,410.00 Unrealized Gain (Loss) 1,990.00 -910.00 -200.00 880.00 -7,240.00 8,120.00

Cost Fair Value Evers Company ($15,200 + 1530 || (950+90 x $20) Rogers Company (910 X $20) | | (910 X $21) Total Less: Previous securities fair value adjustment bal.-Cr Securities fair value adjustment-Dr. 16,730.00 18,200.00 34,930.00 20,800.00 19,110.00 39,910.00 Unrealized Gain (Loss) 4,070.00 910.00 4,980.00 880.00 4,100.00 31-12-2020 31-12-2021 Partial Balance Sheet Headland, Inc. Particulars Current Assets: Dividend Receivable Investments: Available for sale of securitis (fair value) Stock holders' equity Accumulates other comprehensive gain 3,120.00 37,410.00 39,910.00 880.00 4,980.00