Question

shows in tabular form the account balances under each method at December 31, 2022. PH.5 (LO 2, 3) Here is Kalvin Company's portfolio of long-term stock investments at December 31, 2021, the end of its first year of operations. Journalize stock transactions, and show balance sheet presentation. Cost 1,400 shares of Batone Inc. common stock $73,500 1,200 shares of Mendez Corporation common stock 84,000 800 shares of P. Tillman Corporation preferred stock 33,600 On December 31, the total cost of the portfolio equaled the total fair value. Kalvin had the following transactions related to the securities during 2022. Jan. 20 Sold all 1,400 shares of Batone Inc. common stock at $55 per share. 28 Purchased 400 shares of $10 par value common stock of P. Wahl Corporation at $78 per share. 30 Received a cash dividend of $1.25 per share on Mendez Corporation common stock. Feb. 8 Received cash dividends of $0.40 per share on P. Tillman Corporation preferred stock. 18 Sold all 800 shares of P. Tillman preferred stock at $35 per share. July 30 Received a cash dividend of $1.10 per share on Mendez Corporation common stock Sept. Purchased an additional 600 shares of the $10 par value common stock of P. Wahl Corporation at $82 per share. Dec. Received a cash dividend of $1.50 per share on P. Wahl Corporation common stock. 6 1 At December 31, 2022, the fair values of the securities were: Mendez Corporation common stock $65 per share P. Wahl Corporation common stock $77 per share Kalvin uses separate account titles for each investment, such as Investment in Mendez Corporation Common Stock. Instructions a. Prepare journal entries to record the transactions. Loss on sale of Tillman stock investments $5,600 b. Prepare the adjusting entry at December 31, 2022, to report the portfolio at fair value. Unrealized loss $9,400 c. Show the balance sheet presentation at December 31, 2022. PH.6 (LO 3) The following data, presented in alphabetical order, are taken from the records of

Answer 1

a.) Journal entries to record the transactions

Date	Account Title and Explanation	Debit $	Credit $
20-Jan.-2022	Cash (1,400*$55)	77,000
	Investment in Batone Inc.		73,500
	Gain on Sale of Investments		3,500
	(To record sale of 1400 shares of batone inc. at $55 per share)
28-Jan-2022	Investment in P. Whal Coprporation (400*$78)	31,200
	Cash		31,200
	(Too record purchase of 400 shares at $78 per share)
30-Jan-2022	Cash (1200*$1.25)	1,500
	Dividend received		1,500
	(To record receipt of dividend on Mendez corporation common stock)
8-Feb-2022	Cash (800*$0.4)	320
	Dividend received		320
	(To record receipt of dividend on P. Tillman corporation preferred stock)
18-Feb-2022	Cash (800*$35)	28,000
	Loss on Sale of Investment	5,600
	Investment in P. Tillman Corporation		33,600
	(To record sale of 800 shares of P. Tillman corporation at $35 per share)
30-July-2022	Cash (1200*$1.10)	1,320
	Dividend Received		1,320
	(To record receipt of dividend on Mendez corporation common stock)
6-Sept-2022	Investment in P. Wahl Corporation (600*$82)	49,200
	Cash		49,200
	(To record purchase of additional 600 common stock of P. Wahl corporation)
1-Dec-2022	Cash (1,000*$1.50)	1,500
	Dividend received		1,500
	(To record receipt of dividend on P. Wahl corporation common stock)

b.) Adjusting Entry at 31 December, 2022 to record portfolio

31-Dec-2022	Unrealised loss on stock (1,200*$5)	6,000
	Investment in Mendez Corporation		6,000
	(To record 1200 shares of Mendez corp. on Fair Value i.e. $65)
30-Dec-2022	Unrealised loss on stock (400*$1 + 600*$5)	3,400
	Investment in P. Wahl Corp.		3,400
	(To record 1000 shares of Mendez corp. on Fair Value i.e. $77)

c.) Balance Sheet Extract as at 31 December, 2022

Current Assets
Stock Investment	$155,000
Shareholder's Equity
Total paid-in capital and retained earnings
Less: Unrealized loss on available-for-sale securities	9,400
Total stockholders’ equity

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