ACCT 201 - Dryfus Company, Problem
Dryfus Company, which began operations in 2002, invests its idle cash in trading securities. The following transactions relate to the company's short-term investments in its trading securities.
2002 Transactions in Trading Securities
Mar. 10 Purchased 2,450 shares of Ford Motor Company, at $26 per share plus $1,653 commission.
May 7 Purchased 2,200 shares of Lucent at $44.25 per share, plus a $968 commission. ...view middle of the document...
2003 Transactions in Trading Securities
Apr. 26 Sold 2,200 shares of Lucent at $43.75 per share less a $1,050 commission.
27 Sold 1,200 shares of Black and Decker at $49.25 less a $735 commission.
June 2 Purchased 2,500 shares of Merck stock at $72.50 per share plus a $3,890 brokerage fee.
14 Purchased 900 shares of Wal-Mart at $50.25 per share plus a $1,082 commission.
2004 Transactions in Trading Securities
Jan. 28 Purchased 2,500 shares of Dell Co. stock at $39.50 per share plus a $2,356 commission.
31 Sold 2,500 shares of Merck at $71.25 per share less a brokerage commission of $2,356.
Aug. 22 Sold 2,450 shares of Ford Motor Company, at $23.50 per share less $1,437 commission.
Sep. 3 Purchased 3,400 shares of Nokia stock at $41.25 per share plus a $3,000 brokerage fee.
Oct. 9 Sold 900 shares of Wal-Mart at $51.25 per share less a $1,025 commission.
1. Prepare journal entries to record these short-term investment activities for the years shown. (Ignore any year-end adjusting entries.)
2. On December 31, 2004, prepare the adjusting entry to record the market value of these investments: Nokia's share price was $42.75 and Dell's share price was $42. (The Market Adjustment - Trading account had an unadjusted balance of zero.)