Rose Company had no short-term investments prior to year 2013.It had the following transactions involving short-term investmentsin available-for-sale securities during 2013. Apr. 16 Purchased 4,000 shares of Gem Co. stock at $25.75 pershare plus a $400 brokerage fee.
May 1 Paid $160,000 to buy 90-day U. S. Treasury bills (debtsecurities): $160,000 principal amount, 5% interest, securitiesdated May 1.
July 7 Purchased 2,000 shares of PepsiCo stock at $49.00 pershare plus a $370 brokerage fee.
July 20 Purchased 1,000 shares of Xerox stock at $15.00 pershare plus a $450 brokerage fee.
Aug. 3 Received a check for principal and accrued interest onthe U. S. Treasury bills that matured on July 29.
Aug.15 Received an $0.95 per share cash dividend on the Gem Co. stock.
Aug. 28 Sold 2,000 shares of Gem Co. stock at $32.50 per shareless a $490 brokerage fee.
Oct. 1 Received a $2.00 per share cash dividend on the PepsiCoshares.
Dec. 15 Received a $1.10 per share cash dividend on theremaining Gem Co. shares.
Dec. 31 Received a $1.20 per share cash dividend on the PepsiCoshares.
1. Prepare journal entries to record the preceding transactionsand events.
2. Prepare a table to compare the year-end cost and fair valuesof Perryâs short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $28.00; PepsiCo,$46.25; and Xerox, $12.00.
3. Prepare an adjusting entry, if necessary, to record theyear-end fair value adjustment for the portfolio of short-terminvestments in available-for-sale securities.