(a) The 2025 adjusting entry. (b) The sale of the Gordon stock. (c) The purchase of the Earnhart stock. (d) The 2026 adjusting entry for the portfolio.
(a) The 2025 adjusting entry. (b) The sale of the Gordon stock. (c) The purchase of the Earnhart stock. (d) The 2026 adjusting entry for the portfolio.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheridan Company has the following securities in its portfolio on December 31, 2025. None of these investments are accounted for
under the equity method.
Investments
1,500 shares of Gordon, Inc., common
5,000 shares of Wallace Corp., common
400 shares of Martin, Inc., preferred
Cost
$79,500
Fair Value
$75,000
159,500
59,600
61,000
$304,100 $295,500
165,000
All of the securities were purchased in 2025.
In 2026, Sheridan completed the following securities transactions.
Investments
5,000 shares of Wallace Corp., common
700 shares of Earnhart Corp., common
400 shares of Martin, Inc., preferred
March 1 Sold the 1,500 shares of Gordon, Inc., common. @ $45 less fees of $1,200.
April 1 Bought 700 shares of Earnhart Corp., common, @ $75 plus fees of $1,100.
Sheridan's portfolio of equity securities appeared as follows on December 31, 2026.
Cost
$165,000
53,600
59,600
$278,200
Fair Value
$159,500
50,100
57,700
$267,300
Prepare the general journal entries for Sheridan Company for:
(a) The 2025 adjusting entry.
(b) The sale of the Gordon stock.
(c) The purchase of the Earnhart stock.
(d) The 2026 adjusting entry for the portfolio.
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