Targett Company had no short-term investments prior to the year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017.Required:Prepare journal entries to record the preceding transactions and events.Prepare a table to compare the year-end cost and fair values of Targett’s short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $26.50, PepsiCo, $46.50; and Xerox, $13.75. (hint Cost=$164,220)Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in the available-for-sale securities. (hint Dr. Unrealized Loss-Equity $4,470)How do these short-term investments affect Targett’s (a) income statement for year 2017 and (b) the equity section of its balance sheet at year-end 2017? Purchase 4,000 shares of gem CoApril 16stock at $24.25 per share plus a $180 brokeragefee.May 1Treasury bills (debt securities):$100,000 principalPaid $100,000 to buy 3-moth USamount, 6% interest, securities mature July 31st.July 7thstock at $16.75 per share plus a $205 brokerage fee.Purchased 2,000 shares of PepsiCoJuly 20stock at $16.75 per share plus a $205. BrokeragePurchased $1000 shares of Xeroxfee.Received a check for the principal andAug 1accrued interest on the US Treasury bills thatmatured on July 31st.August 15dividend on the PepsiCo shares.Received an $0.85 per share cashAugust 28at $39 per share less a $225 brokerage feeSold 2,000 shares of Gem Co. stockOct 1dividend on the PepsiCo shares.Received a $1.90 per share cashDec 15thdividend on the remaining Gem Co shares.Received a $1.05 per share cashDec 31stdividend on the PepsiCo shares.Received a $1.30 per share cash

Journal entry: Journal entry is the book of original entry where first transactions are recorded in…

Answered: Prepare journal entries to record the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Targett Company had no short-term investments prior to the year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017.

Required:

Prepare journal entries to record the preceding transactions and events.
Prepare a table to compare the year-end cost and fair values of Targett’s short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $26.50, PepsiCo, $46.50; and Xerox, $13.75. (hint Cost=$164,220)
Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in the available-for-sale securities. (hint Dr. Unrealized Loss-Equity $4,470)
How do these short-term investments affect Targett’s (a) income statement for year 2017 and (b) the equity section of its balance sheet at year-end 2017?

Purchase 4,000 shares of gem Co
April 16
stock at $24.25 per share plus a $180 brokerage
fee.
May 1
Treasury bills (debt securities):$100,000 principal
Paid $100,000 to buy 3-moth US
amount, 6% interest, securities mature July 31st.
July 7th
stock at $16.75 per share plus a $205 brokerage fee.
Purchased 2,000 shares of PepsiCo
July 20
stock at $16.75 per share plus a $205. Brokerage
Purchased $1000 shares of Xerox
fee.
Received a check for the principal and
Aug 1
accrued interest on the US Treasury bills that
matured on July 31st.
August 15
dividend on the PepsiCo shares.
Received an $0.85 per share cash
August 28
at $39 per share less a $225 brokerage fee
Sold 2,000 shares of Gem Co. stock
Oct 1
dividend on the PepsiCo shares.
Received a $1.90 per share cash
Dec 15th
dividend on the remaining Gem Co shares.
Received a $1.05 per share cash
Dec 31st
dividend on the PepsiCo shares.
Received a $1.30 per share cash

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