FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Rose Company had no short-term investments prior to this year. It had the following transactions this year
involving short-term stock investments with insignificant influence.
Apr. 16 Purchased 3,500 shares of Gem Co. stock at $24 per share.
July 7 Purchased 2,000 shares of PepsiCo stock at $49 per share.
20 Purchased 1,000 shares of Xerox stock at $16 per share.
Aug. 15 Received a $1.00 per share cash dividend on the Gem Co. stock.
28 Sold 2,000 shares of Gem Co. stock at $30 per share.
Oct. 1 Received a $2.50 per share cash dividend on the PepsiCo shares.
Dec. 15 Received a $1.00 per share cash dividend on the remaining Gem Co. shares.
31 Received a $1.50 per share cash dividend on the PepsiCo shares.
Required
1. Prepare
2. Prepare a table to compare the year-end cost and fair values of Rose’s short-term stock investments.
The year-end fair values per share are Gem Co., $26; PepsiCo, $46; and Xerox, $13.
3. Prepare an
stock investments.
Analysis Component
4. Explain the
5. How do these short-term stock investments affect Rose’s (a) income statement for this year and (b) the
equity section of its balance sheet at this year-end?
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