First National Bank buys and sells securities. The company’s fiscal year ends on December 31. The following selected transactions relating to First National’s trading account occurred during the year. December 20 Purchases 280,000 shares in Classic Computers common stock for $1,344,000 ($4.80 per share).December 28 Receives cash dividends of $5,800 from the Classic Computers shares.December 31 The fair value of Classic Computers’ stock is $4.60 per share. Required:1. Record each of these transactions, including an adjustment on December 31 for the investment’s fair value, if appropriate. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Calculation for the original value of stock Original value of stock = $1,344,000 / 280,000 = $4.80…

Answered: First National Bank buys and sells…

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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First National Bank buys and sells securities. The company’s fiscal year ends on December 31. The following selected transactions relating to First National’s trading account occurred during the year.

December	20	Purchases 280,000 shares in Classic Computers common stock for $1,344,000 ($4.80 per share).
December	28	Receives cash dividends of $5,800 from the Classic Computers shares.
December	31	The fair value of Classic Computers’ stock is $4.60 per share.

Required:
1. Record each of these transactions, including an adjustment on December 31 for the investment’s fair value, if appropriate. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

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