Asked by Iqbal Qayum on May 27, 2024
Verified
On March 1,2019,Young Company paid cash to purchase the following stocks as long-term investments:
Old Corporation common stock (par $5),2,000 shares at $5 per share (10% of outstanding shares)
ABC Corporation common stock (par $10),3,000 shares at $25 per share (15% of outstanding shares)
XYZ Corporation common stock (par $10),3,000 shares at $20 per share (10% of outstanding shares)
The market prices per share at December 31,end of the accounting period,were as follows:
Prepare the required journal entries at the following dates: March 1,2019,December 31,2019 and December 31,2020.
Long-Term Investments
Assets held by a company for a period exceeding one year, intended to bring a return on the investment over time.
Common Stock
Equity securities that represent ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.
Accounting Period
A specific time frame in which financial transactions are recorded and financial statements are prepared, commonly a fiscal quarter or year.
- Distinguish between different types of securities and their accounting treatments.
- Prepare the necessary journal entries for the acquisition and sale of securities.
Verified Answer
(2,000 × $5)+ (3,000 × $25)+ (3,000 × $20)= $145,000December 31,2019:
December 31,2020:
Learning Objectives
- Distinguish between different types of securities and their accounting treatments.
- Prepare the necessary journal entries for the acquisition and sale of securities.
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