Barzetti Had No Investments Prior to the Current Year

question 163

Essay

Barzetti had no investments prior to the current year.It had the following transactions involving available-for-sale and held-to-maturity securities during the year.The stock purchases are considered short-term,non-influential securities.Prepare Barzetti's journal entries to record the transactions and events associated with the investment purchases.
Apr.18 Purchased 5,000 shares of Lacy Co.stock at $26.50 per share plus a $350 brokerage fee.
May 01 Purchased $200,000 of Butcher's 7%,two-year bonds payable at par value.Interest payments are paid semiannually on November 1 and May 1.It is the company's intent to hold the bonds until maturity.
Jun.10 Purchased 4,000 shares of SubCo stock at $48.25 plus a $325 brokerage fee.
Nov.01 Received a check for the first semiannual interest payment on the Butcher's bonds.
Nov.15 Received a $0.65 per share cash dividend on the Lacy Co.shares.
Nov.30 Sold 2,000 shares of Lacy Co.stock at $29 less a $300 brokerage fee.
Dec.15 Received a $1.10 per share cash dividend on the SubCo shares.
Dec.20 Received a $.075 per share cash dividend on the remaining Lacy Co.shares.
Dec.31 Prepare an adjusting entry to record the fair value adjustment on the equity securities.At December 31,the Lacy Co.stock has a fair value of $28 per share,and the SubCo stock has a fair value of $49.50 per share.

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Definitions:

Differentiated Products

Goods or services that are distinguished from similar products in the market by unique characteristics, such as quality, brand, or performance.

Maximizing Profits

Refers to the process of increasing the difference between total revenues and total costs to achieve the highest possible earnings.

Minimizing Losses

A strategy or approaches taken to reduce the amount of loss incurred in a business operation or investment.

Price Discrimination

A pricing strategy where identical or largely similar goods or services are sold at different prices by the same provider in different markets or to different segments of consumers.