P13-2B In January 2008, the management of Pandya Company concludes that it has sufficient

Price: $2.50


In January 2008, the management of Pandya Company concludes that it has sufficient
cash to purchase some short-term investments in debt and stock securities. During the year, the
following transactions occurred.

Feb. 1 Purchased 600 shares of EMP common stock for $40,000, plus brokerage fees of $800.
Mar. 1 Purchased 500 shares of SEK common stock for $15,000, plus brokerage fees of $300.
Apr. 1 Purchased 60 $1,000, 9% CRE bonds for $60,000, plus $1,200 brokerage fees. Interest is
payable semiannually on April 1 and October 1.
July 1 Received a cash dividend of $0.60 per share on the EMP common stock.
Aug. 1 Sold 300 shares of EMP common stock at $72 per share, less brokerage fees of $350.
Sept. 1 Received a $1 per share cash dividend on the SEK common stock.
Oct. 1 Received the semiannual interest on the CRE bonds.
Oct. 1 Sold the CRE bonds for $64,000, less $1,000 brokerage fees.

At December 31, the fair value of the EMP common stock was $66 per share. The fair value of
the SEK common stock was $29 per share.

Instructions
(a) Journalize the transactions and post to the accounts Debt Investments and Stock
Investments. (Use the T-account form.)
(b) Prepare the adjusting entry at December 31, 2008, to report the investments at fair value. All
securities are considered to be trading securities.
(c) Show the balance sheet presentation of investment securities at December 31, 2008.
(d) Identify the income statement accounts and give the statement classification of each account