29 Jun Question During the course of your examinat
Question
During the course of your examination of the financial statements of Poppler Corporation for the year ended December 31, 2015, you found a new account, “Investments.” Your examination revealed that during 2015, Poppler began a program of investments, and all investment-related transactions were entered in this account. Your analysis of this account for 2015 follows:
Poppler Corporation
Analysis of Investments
For the Year Ended December 31, 2015
Date—2015 Debit Credit
(a)
Harmon Company Common Stock
Feb. 14 Purchased 4,000 shares @ $55 per share. $220,000
July 26 Received 400 shares of Harmon Company common stock
as a stock dividend. (Memorandum entry in general ledger.)
Sept. 28 Sold the 400 shares of Harmon Company common stock
received July 26 @ $60 per share. $24,000
(b)
Debit Credit
Taber Inc., Common Stock
Apr. 30 Purchased 20,000 shares @ $40 per share. $800,000
Oct. 28 Received dividend of $1 per share. $20,000
Additional information:
1. The fair value for each security as of the 2015 date of each transaction follow:
Security Feb. 14 Apr. 30 July 26 Sept. 28 Dec. 31
Harmon Company $55 $62 $60 $64
Taber Inc. $40 33
Doppler Corp. 25 28 30 33 35
2. All of the investments of Poppler are nominal in respect to percentage of ownership (5% or less).
3. Each investment is considered by Poppler’s management to be available-for-sale.
Instructions
(1) Prepare any necessary correcting journal entries related to investments (a) and (b).
(2) Prepare the entry, if necessary, to record the proper valuation of the available-for-sale equity security portfolio as of December 31, 2015.
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