Problem C-2B (40 minutes)
Part 1
Feb. 6
Short-Term Investments—AFS (Nokia)…………
143,250
Cash ……………………………………………………
143,250
15
Short-Term Investments—AFS (T-bills) ………..
20,000
Cash ……………………………………………………
20,000
Short-Term Investments—AFS (Dell) …………..
48,655
Cash ……………………………………………………
48,655
Short-Term Investments—AFS (Merck) ………..
184,140
Cash ……………………………………………………
184,140
30
Cash ………………………………………………………….
646
Dividend Revenue …………………………………..
646
Cash* ……………………………………………………….
38,050
Gain on Sale of Short-Term Investments ….
Short-Term Investments—AFS (Nokia)** ….
35,813
16
Cash …………………………………………………………
20,600
Short-Term Investments—AFS (T-bills) ……..
20,000
24
Cash …………………………………………………………
120
Dividend Revenue …………………………………..
120
Cash ………………………………………………………….
510
Dividend Revenue …………………………………..
510
180
Dividend Revenue …………………………………..
180
Problem C-2B (Concluded)
Part 2
Comparison of Cost and Fair Values of AFS Portfolio
Unrealized
Cost Fair Value Gain (Loss)
Nokia (2,550 x $41.25) + $2,250a ……… $107,437
Part 3
Dec. 31
41,494
41,494
Part 4
The balance sheet would report the cost of these short-term investments in
Part 5
(a) Income statement
(b) Equity section of Balance sheet
Problem C-3B (60 minutes)
Part 1
2016
Mar. 10
Long-Term Investments—AFS (Apple) …………………………..
31,400
April 7
Long-Term Investments—AFS (Ford) …………………………..
57,283
Long-Term Investments—AFS (Polaroid) ………………………….
29,090
Dec. 31
Unrealized Loss—Equity …………………………………………………
2,873
*
Cost _
Fair Value
Apple …………………
$ 31,400
$ 33,000
Ford …………………..
Polaroid ……………..
Problem C-3B (Continued)
2017
Apr. 26
Cash …………………………..………………………………………………….
50,043
7,240
57,283
35,700
35,700
25,480
25,480
Nov. 27
Cash ……………………………………………………….…………………….
29,755
29,090
Dec. 31
Fair Value Adjustment—AFS (LT)* …………………………..
5,093
Unrealized Loss—Equity …………………………..
2,873
Unrealized Gain—Equity …………………………..
2,220
Annual adjustment to fair values.
*
Cost _
Fair Value
Apple ………..
$31,400
$34,800
Duracell …….
Sears ………..
Problem C-3B (Continued)
2018
Jan. 28
Long-Term Investments—AFS (Coca-Cola) ……………………….
41,480
Cash ……………………………………………………….
Aug. 22
Cash ……………………………………………………….…………………….
23,950
Long-Term Investments—AFS (Apple) ………………………..
Long-Term Investments—AFS (Motorola) ………………………….
84,780
Cash …………………………..…………………………..
Oct. 9
Cash ……………………………………………………….…………………….
28,201
Gain on Sale of Investments …………………………..
Long-Term Investments—AFS (Sears) …………………………
Oct. 31
Cash ……………………………………………………….…………………….
26,102
Long-Term Investments—AFS (Duracell) ……………………..
Dec. 31
Unrealized Gain⎯Equity …………………………………………………
2,220
Unrealized Loss⎯Equity ………………………………………………..
6,260
Fair Value Adjustment—AFS (LT)* …………………………..
Problem C-3B (Concluded)
Part 2
12/31/2016
12/31/2017
12/31/2018
Part 3
2016
2017
2018
Realized gains (losses)
Sale of Ford shares ………………………….
$(7,240)
Total realized gain (loss) ……………………
Problem C-4B (50 minutes)
Part 1
1. Journal entries (assuming significant influence)
2016
Jan. 5
Long-Term Investments—Bloch …………………………..
200,500
200,500
Aug. 1
Cash …………………………..………………………………………………….
21,000
21,000
Dec. 31
Long-Term Investments—Bloch …………………………..
20,500
20,500
2017
Aug. 1
Cash …………………………..………………………………………………….
27,000
Dec. 31
Long-Term Investments (Bloch) …………………………..
19,500
19,500
2018
Jan. 8
Cash …………………………..………………………………………………….
375,000
192,500
182,500
Problem C-4B (Continued)
2. Carrying value per share (see computations in part 1)
3. Change in Brinkley’s equity
Earnings from Bloch (for 2016) ……………………..
$ 20,500
Earnings from Bloch (for 2017) ……………………..
19,500
Part 2
1. Journal entries (assuming NO significant influence)
2016
Jan. 5
Long-Term Investments—AFS (Bloch) …………………………..
200,500
200,500
Aug. 1
21,000
21,000
Dec. 31
Fair Value Adjustment—AFS (LT)* …………………………..
37,500
37,500
Problem C-4B (Concluded)
2017
Aug. 1
Cash …………………………..………………………………………………….
27,000
27,000
Dec. 31
35,000
35,000
2018
Jan. 8
Cash …………………………..………………………………………………….
375,000
200,500
174,500
72,500
2. Investment cost per share, January 7, 2018
Dividend Revenue (for 2016) …………………………
Dividend Revenue (for 2017) …………………………
27,000
Problem C-5B (40 minutes)
Part 1
Available–for-sale securities on December 31, 2016
Security
Cost
Fair Value
27,500 shares of Company R common stock ………….
$559,125
$568,125
42,500 shares of Company V common stock ………….
49,920
$975,330
$959,063
Disclosure
The portfolio of available–for-sale securities would be reported on the
Part 2
Part 3
Only gains or losses realized on the sale of available-for-sale securities
appear on the 2016 income statement. Unrealized gains or losses appear
in the equity section of the balance sheet.
Year 2016 realized gain (loss)
11,000 shares of Company T stock ……..
Problem C-6BA (60 minutes)
Part 1
2016
May 26
Accounts Receivable—Fuji …………………………..
60,450
60,450
June 1
Cash …………………………..………………………………………………….
64,800
64,800
July 25
Cash* ……………………………………………………………………………..
59,800
60,450
Accounts Receivable—Martinez Brothers ……………………….
38,556
38,556
Dec. 6
Accounts Receivable—Chi–Ying …………………………..
35,975
35,975
Dec. 31
Accounts Receivable—Martinez Brothers ………………………..
Dec. 31
Accounts Receivable—Chi–Ying …………………………..
2017
Jan. 5
Cash* ……………………………………………………………………………..
39,500
36,250
Jan. 13
Cash* ……………………………………………………………………………..
39,274
40,068