Question

Current Attempt in Progress In January 2020, the management of Ivanhoe Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred. Feb. 1 Purchased 700 shares of Muninger common stock for $38,500. Purchased 900 shares of Tatman common stock for $22,500. Mar. 1 Apr. 1 July 1 Aug Purchased 50 $1,050,6% Yoakem bonds for $52,500. Interest is payable semiannually on April 1 and October 1. Received a cash dividend of $0.60 per share on the Muninger common stock Sold 233 shares of Muninger common stock at $65 per share. Received a $2 per share cash dividend on the Tatman common stock. Received the semiannual interest on the Yoakem bonds. 1 Sept. 1 Oct. 1 Oct. 1 Sold the Yoakem bonds for $51.500. At December 31, the fair value of the Muninger common stock was $56 per share. The fair value of the Tatman common stock was $24 per share.

Answer 1

Answer :-

Solution 1:

Journal Entries - IVANHOE Company
Date	Particulars	Debit	Credit
1-Feb	Stock Investment Dr	$38,500.00
	To Cash		$38,500.00
	(To record investment in share of Muninger)
1-Mar	Stock Investment Dr	$22,500.00
	To Cash		$22,500.00
	(To record investment in share of Tatman)
1-Apr	Debt Investment Dr	$52,500.00
	To Cash		$52,500.00
	(To record investment in bond)
1-Jul	Cash Dr (700*$0.60)	$420.00
	To Dividend revenue		$420.00
	(To record dividend revenue)
1-Aug	Cash Dr (233*$65)	$15,415.00
	To Stock investment ($38,500/700*233)		$12,815.00
	To Gain on sale of stock investment		$2,600.00
	(To record sale of stock investment)
1-Sep	Cash Dr (900*$2)	$1800.00
	To Dividend revenue		$1800.00
	(To record dividend revenue)
1-Oct	Cash Dr ($52,500*3.00%)	$1,575.00
	To Interest revenue		$1,575.00
	(To record interest revenue)
1-Oct	Cash Dr	$51,500.00
	Loss on sale of debt investment Dr	$1,000.00
	To Debt Investment		$52,500.00
	(To record sale of debt ivnestment)

Solution 2:

Stock Investment
Date	Debit	Date	Credit
1-Feb	$38,500.00	1-Aug	$12,815.00
1-Mar	$22,500.00
Ending balance	$48,185.00

Debt Investment
Date	Debit	Date	Credit
1-Apr	$52,500.00	1-Oct	$52,500.00

Solution 3:

Journal Entries - IVANHOE Company
Date	Particulars	Debit	Credit
31-Dec	Unrealized loss - Income Dr ($48,185 - 466*$56 + 900*$24)	$489.00
	To Fair value adjustment		$489.00
	(To record adjusting entry to present investment at fair value)

Solution 4:

IVANHOE Company
Balance Sheet (Partial)
As on December 31,2020
Particulars		Amount
Stock Investment	$48,185.00
Less: Fair value adjustment	$489.00	$47,696.00