Stock investments : Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company. Available-for-sale securities : These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. To journalize : The stock investment transactions in the books of Company F.

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Answer 1

Question

Chapter 12, Problem 12.5BP

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Company F.

(b)

To determine

To post: The entries to stock investment account.

(c)

To determine

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

(d)

To determine

To show: The balance sheet representation of available-for-sale securities

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Answer 2

Question

Chapter 12, Problem 12.5BP

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Company F.

(b)

To determine

To post: The entries to stock investment account.

(c)

To determine

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

(d)

To determine

To show: The balance sheet representation of available-for-sale securities

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Answer 3

Question

Chapter 12, Problem 12.5BP

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Company F.

(b)

To determine

To post: The entries to stock investment account.

(c)

To determine

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

(d)

To determine

To show: The balance sheet representation of available-for-sale securities

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Answer 4

Question

Chapter 12, Problem 12.5BP

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Company F.

(b)

To determine

To post: The entries to stock investment account.

(c)

To determine

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

(d)

To determine

To show: The balance sheet representation of available-for-sale securities

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Answer 5

Chapter 12, Problem 12.5BP

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Company F.

(b)

To determine

To post: The entries to stock investment account.

(c)

To determine

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

(d)

To determine

To show: The balance sheet representation of available-for-sale securities

Answer 6

Chapter 12, Problem 12.5BP

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Company F.

Answer 7

Chapter 12, Problem 12.5BP

(a)

To determine

Stock investments: Stock investments are equity securities which claim ownership in the investee company and pay a dividend revenue to the investor company.

Available-for-sale securities: These are short-term or long-term investments in debt and equity securities with an intention of holding the investment for some strategic purposes like meeting liquidity needs, or manage interest risk.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.

Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The stock investment transactions in the books of Company F.

Answer 8

(b)

To determine

To post: The entries to stock investment account.

Answer 9

(b)

To determine

To post: The entries to stock investment account.

Answer 10

(c)

To determine

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

Answer 11

(c)

To determine

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

Answer 12

(d)

To determine

To show: The balance sheet representation of available-for-sale securities

Answer 13

(d)

To determine

To show: The balance sheet representation of available-for-sale securities

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - Prob. 4Q Ch. 12 - 5 What is the cost of an investment in stock? Ch. 12 - Prob. 6Q Ch. 12 - Prob. 7Q Ch. 12 - Prob. 8Q Ch. 12 - Prob. 9Q Ch. 12 - Prob. 10Q

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To post: The entries to stock investment account.

To journalize: The adjusting entry related to portfolio of securities as at December 31, 2016

To show: The balance sheet representation of available-for-sale securities

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Chapter 12 Solutions