Journalize the Entries to Record the Transactions of Investment

These are journal entries of  2 years'  investments transactions. Rules of double entry system will apply on these investment transactions. See detail problem before getting its solution.

Date of Asking Question

Title of Question
help with a question
Detail of Question
In problem PR 15-1A I need help find out to work the part one and part 2 of the problem.

In acct 2 text book warren reeve duchac accounting 23e. pages 697-698-- roman products, Inc. is a wholesaler of men hair products. the company began operations on Jan. 1, 2010. the following transactions relate to securities acquired by roman products inc. which has a fiscal year ending in Dec.31 2010. I am in need of how to work out the excel problems .

Year 2010

jan.3 purchased 3000 shares of whalen inc. as an available for sale investment at $46 per share including the brokerage commission

july 6 split whalen inc. stock 2 for 1 and received the regular cash dividend of $0.60 per share on the whalen inc. stock after the split.

Oct. 14 sold 900 shares of whalen inc stock at $25 per share , less a brokerage commission of $50.

Dec. 9 Received the regular cash dividend of $0.60 per share .

Dec. 31  Whalen inc. is classified as an available for sale investment and is adjusted to fair value of $21 per share. Use the Valuation allowance for available for sale investment account in making the adjustment.

Year 2011

Jan 5 Purchased an influential interest in Tasmania co. for $620,000 by purchasing 60,000 shares directly from the estate of the founder of Tasmania . there are 150,000 share of Tasmania Co. stock outstanding .

July 8. received the regular cash divided of $0.70 per share on whalen inc. stock.

Dec.8. received the regular cash dividend of $0.70 per share plus an extra dividend of $0.15 per share on whalen inc. stock.

31 received $18,000 of cash dividends on Tasmania Co. stock Tasmania Co. reported net income of $74,000 in 2011. Roman products uses the equity method of accounting for its investment in Tasmania Co.

31. Whalen Inc. is classified as an available for sale investment and is adjusted to fair value of $26 per share. use the valuation allowance for available for sale investments account in making the adjustment.

You have to :

1. Journalize the entries to record the preceding transactions.



Journal Entries 

Jan. 3,  2010

Shares Investments in Whalen Inc. Dr. 138000

Bank Account Cr. 138000

July 6, 2010

Now, when in 6 july 2010, shares' stock will be split 2 for every 1, it means number of shares will be double. So, dividend will increase as per this rule

Dividend Received

3000 X 2 X 0.60 = $ 3600

Bank Account Dr. 3600

Dividend Received Account Cr.3600

Oct. 14, 2010 

Sold 900 shares @ $ 25 per share less brokerage commission $ 50

If we want to calculate the profit on this sale, we have to calculate the real cost of these shares.

Cost of 900 shares

= 138000 X 900/ 6000 = $ 20700

Net sale value of 900 shares = (900 X $ 25 ) - $50 = $ 22450

Profit on sale of 900 shares = $ 1750

Bank Account Dr. 22450

Share investment in Whalen Inc. Cr. 20700

Profit on Sale of Share Investment in Whalen Inc. Cr. 1750

Dec. 9, 2010

Balance shares in hand = 6000 -900 = 5100

Dividend = 0.60 x 5100 =$ 3060

Bank Account Dr. 3060

Dividend Received Cr. 3060

Dec. 31, 2010

 Fair Value of Per share after sale

= ( 138000 - 20700 )/ 5100 =  $ 23 per share

New fair value = $ 21

Unrealized loss due to changing  fair value

= $ 23 -$ 21 = $ 2

5100 X 2 =  $ 10200

Unrealized loss of shares investment in Whalen Inc. Dr. 10200

Valuation Allowance for Available-for-Sale Investment Cr. 10200

Jan. 5, 2011

 Investments in Tasmania Co. Dr. 620000

Bank Account Cr. 620000

July 8, 2011

Balance shares in hand = 6000 -900 = 5100

Dividend = 0.70 x 5100 = $ 3570

Bank Account Dr. 3570

Dividend Received from Whalen Inc.  Cr. 3570

Dec. 8, 2011

Balance shares in hand = 6000 -900 = 5100

Dividend = (0.70+ 0.15) x 5100 = $ 4335

Bank Account Dr. 4335

Dividend Received from Whalen Inc.  Cr. 4335

Dec. 31, 2011 

Bank Account Dr. 18,000
Investment in Tasmania Inc.  Cr.18,000

Dec. 31, 2011

.Fair value increased from $ 21 per share to $ 26 per share

Unrealized gain due to changing  fair value

= $ 26 -$ 21 = $ 5

5100 X 5 =  $ 25500

Valuation Allowance for Available-for-Sale Investment Dr. 25500

Unrealized Gain of shares investment in Whalen Inc. Cr. 25500







access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Finance Journal Entries Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
Accounting Education: Journalize the Entries to Record the Transactions of Investment
Journalize the Entries to Record the Transactions of Investment
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock