123. Jackson Company engaged in the following investment transactions during the current year.

Feb 17	Purchased 500 shares of Medical Company common for $20 per
	share plus a brokerage commission of $100.
	These are trading securities.
April 1	Bought 30,000 of the 100,000 outstanding shares of Olde
	Company for $300,000. Goodwill of $80,000 was included in the
	price.
June 25	Received a $1.20 per share dividend on Medical Company stock.
June 30	Olde Company reported second quarter profits of $20,000.
Oct 1	Purchased 2,000 shares of Alpha Company for $15 per share plus
	a brokerage fee of $400. These shares are classified as available
	for sale.
Dec 31	Medical Co. shares are selling for $25 and Alpha stock is selling
	for $12.

Required:

Prepare the appropriate journal entries to record the transactions for the year including year-end adjustments. Show calculations.

Answer:

Feb. 17	Investment in Medical [$500 x $20) + $100]	10,100
	Cash		10,100
Apr. 1	Investment in Olde	300,000
	Cash		300,000
Jun. 25	Cash (500 x $1.20)	600
	Investment revenue		600
Jun. 30	Investment in Olde ($20,000 x 30%)	6,000
	Investment revenue		6,000
Oct. 1	Investment in Alpha [(2,000 x $15) + $400]	30,400
	Cash		30,400
Dec. 31	Investment in Medical [500 x $25) - $10,100]	2,400
	Unrealized holding gain on investments		2,400
Dec. 31	Unrealized holding loss on investments	6,400
	Fair value adjustment in Alpha [(2,000 x $12) - $30,400]		6,400

Learning Objective: 2 Level of Learning: 3

124. On March 1, 2006, Navy Corporation used excess cash to purchase $100,000 of U.S. Treasury bonds that were selling for 103 plus accrued interest. The appropriate interest rate is 6%. Interest on these bonds is payable on January 1 and July 1 of each year.