P13-5B The following are in Madisen Company’s portfolio of long-term available-for-sale

Price: $2.50


The following are in Madisen Company’s portfolio of long-term available-for-sale
securities at December 31, 2008.

500 shares of Bonds Corporation common stock				26,000
700 shares of Mays Corporation common stock				42,000
600 shares of Dukakis Corporation preferred stock				16,800

On December 31, the total cost of the portfolio equaled total fair value. Madisen Company had
the following transactions related to the securities during 2009.

Jan. 7 Sold 500 shares of Bonds Corporation common stock at $56 per share, less brokerage
fees of $700.
10 Purchased 200 shares, $70 par value common stock of Petengill Corporation at $78 per
share, plus brokerage fees of $240.
26 Received a cash dividend of $1.15 per share on Mays Corporation common stock.
Feb. 2 Received cash dividends of $0.40 per share on Dukakis Corporation preferred stock.
10 Sold all 600 shares of Dukakis Corporation preferred stock at $26 per share less brokerage
fees of $180.
July 1 Received a cash dividend of $1.00 per share on Mays Corporation common stock.
Sept. 1 Purchased an additional 600 shares of the $70 par value common stock of Petengill
Corporation at $75 per share, plus brokerage fees of $900.
Dec. 15 Received a cash dividend of $1.50 per share on Petengill Corporation common stock.

At December 31, 2009, the fair values of the securities were:

Mays Corporation common stock			$63	per share
Petengill Corporation common stock			$72	per share

Madisen uses separate account titles for each investment, such as Investment in Mays
Corporation Common Stock

Instructions
(a) Prepare journal entries to record the transactions.
(b) Post to the investment accounts. (Use T accounts.)
(c) Prepare the adjusting entry at December 31, 2009, to report the portfolio at fair value.
(d) Show the balance sheet presentation at December 31, 2009.