On November 1, 2020, Drucker Co. acquired the following investments in equity securities measured at FV‑NI. Kelly Corporation—750 shares of common stock (no-par) at $60 per share. Keefe Corporation—450 shares preferred stock ($10 par) at $20 per share. On December 31, 2020, the company’s year-end, the quoted market prices were as follows: Kelly Corporation common stock, $52, and Keefe Corporation preferred stock, $24. Following are the data for 2021. Mar. 2, 2021 Dividends per share, declared and paid: Kelly Corp., $1, and Keefe Corp., $0.50. Oct. 1, 2021 Sold 150 shares of Keefe Corporation preferred stock at $25 per share. Dec. 31, 2021 Fair values: Kelly common, $46 per share, Keefe preferred, $26 per share. For Year 2020. a. Prepare the entry for Drucker Company to record the purchase of the securities. Date Account Name Dr. Cr. Nov. 1, 2020 b. Prepare any adjusting entry needed at December 31, 2020. Date Account Name Dr. Cr. Dec. 31, 2020 c. Indicate the items and amounts that should be reported on the 2020 income statement of Drucker and its year-end balance sheet. Assume that the investments are classified as current. Note: Use a negative sign to indicate a loss. Income Statement 2020 Other Revenues and Gains Net gain (loss) on equity securities Answer Balance Sheet, December 31 2020 Assets Investment in equity securities Answer

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 12MCQ: When the market value of a companys available-for-sale securities is lower than its cost, the...

See similar textbooks

Related questions

Concept explainers

Question

On November 1, 2020, Drucker Co. acquired the following investments in equity securities measured at FV‑NI.

Kelly Corporation—750 shares of common stock (no-par) at $60 per share. Keefe Corporation—450 shares preferred stock ($10 par) at $20 per share. On December 31, 2020, the company’s year-end, the quoted market prices were as follows: Kelly Corporation common stock, $52, and Keefe Corporation preferred stock, $24. Following are the data for 2021.

Mar. 2, 2021 Dividends per share, declared and paid: Kelly Corp., $1, and Keefe Corp., $0.50.
Oct. 1, 2021 Sold 150 shares of Keefe Corporation preferred stock at $25 per share.
Dec. 31, 2021 Fair values: Kelly common, $46 per share, Keefe preferred, $26 per share.

For Year 2020.

a. Prepare the entry for Drucker Company to record the purchase of the securities.

Date	Account Name	Dr.	Cr.
Nov. 1, 2020

b. Prepare any adjusting entry needed at December 31, 2020.

Date	Account Name	Dr.	Cr.
Dec. 31, 2020

c. Indicate the items and amounts that should be reported on the 2020 income statement of Drucker

and its year-end balance sheet. Assume that the investments are classified as current.

Note: Use a negative sign to indicate a loss.

Income Statement	2020
Other Revenues and Gains
Net gain (loss) on equity securities	Answer

Balance Sheet, December 31	2020
Assets
Investment in equity securities	Answer

Cash
Interest Receivable
Investment in TS
Fair Value Adjustment--TS
Investment in AFS Securities
Fair Value Adjustment--AFS
Investment in HTM Securities
Investment in Stock
Fair Value Adjustment--Equity Securities
Fair Value Adjustment--Fair Value Option
Allowance for Credit Losses
Accumulated Other Comprehensive Income
Unrealized Gain or Loss--OCI
Unrealized Gain or Loss--Income
Dividend Revenue
Interest Revenue
Investment Income
Loss on Impairment
Recovery of Loss on Impairment
Loss on Sale of Investment
Gain on Sale of Investment
N/A

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions