Business, 23.05.2020 19:57 josuealejandro9632

Rantzow-Lear Company buys and sells securities expecting to earn profits on short-term differences in price. The company's fiscal year ends on December 31. The following selected transactions relating to Rantzow-Lear's trading account occurred during December 2013 and the first week of 2014.

2013
Dec. 17 Purchased 135,000 Grocers' Supply Corporation preferred shares for $607,500.
28 Received cash dividends of $3,400 from the Grocers' Supply Corporation preferred shares.
31
Recorded any necessary adjusting entry relating to the Grocers' Supply Corporation preferred shares. The market price of the stock was $5 per share.

2014
Jan. 5 Sold the Grocers' Supply Corporation preferred shares for $641,250.
Required:
1.1
Prepare the appropriate journal entries for 2013 transactions. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)

Date General Journal Debit Credit
December 17, 2013 Investment in Grocers' Supply preferred shares
Cash 607500
December 28, 2013 Cash
Investment revenue
December 31, 2013 Fair value adjustment
Net unrealized holding gains and losses - I/S
1.2
Prepare the appropriate journal entries for 2014 transactions. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)

Date General Journal Debit Credit
January 05,2014 Cash
Gain on investments
Investment in Grocers' supply preferred shares
December 31, 2014 Net unrealized holding gains hand losses - I/S
Fair value adjustment
2.
Indicate any amounts that Rantzow-Lear Company would report in its 2013 balance sheet and income statement as a result of this investment.

Balance Sheet (short-term investment):
Trading securities
Income Statement:
Investment revenue
Net unrealized holding gaines and losses

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