904-535-2558

EXERCISE E-1

(a) Jan. 1 Debt Investments .................................... 91,200

Cash ($90,000 + $1,200)................... 91,200

July 1 Cash ($90,000 X 10% X 1/2) .................... 4,500

Interest Revenue .............................. 4,500

1 Cash ($32,000 $400) ............................. 31,600

Debt Investments
($91,200 X 30/90) ........................... 30,400
Gain on Sale of Debt Investments
($31,600 $30,400) ....................... 1,200

(b) Dec. 31 Interest Receivable ................................. 3,000

Interest Revenue
($60,000 X 10% X 1/2) ................... 3,000

EXERCISE E-2

(a) Feb. 1 Stock Investments .................................. 8,400

Cash ($8,000 + $400) ....................... 8,400

July 1 Cash (1,200 X $2) .................................... 2,400

Dividend Revenue ........................... 2,400

Sept. 1 Cash ($5,500 $100) ............................... 5,400

Stock Investments
($8,400 X 500/1,200) ...................... 3,500
Gain on Sale of Stock Investments
($5,400 $3,500) ........................... 1,900

Dec. 1 Cash (700 X $1) ....................................... 700

Dividend Revenue ........................... 700

(b) Dividend revenue and the gain on sale of stock investments are
reported under other revenues and gains in the income statement.
EXERCISE E-3

Jan. 1 Stock Investments ...................................... 59,200

Cash ($58,000 + $1,200) ....................... 59,200

July 1 Cash (1,200 X $7) ........................................ 8,400

Dividend Revenue ................................ 8,400

Dec. 1 Cash ($48,000 $800) ................................. 47,200

Stock Investments
($59,200 X 900/1,200)........................ 44,400
Gain on Sale of Stock Investments .... 2,800

Dec. 31 Cash (300 X $7) ........................................... 2,100

Dividend Revenue ................................ 2,100

EXERCISE E-4

(a) Jan. 1 Stock Investments ............................... 150,000

Cash .............................................. 150,000

Dec. 31 Cash ($80,000 X 25%) .......................... 20,000

Stock Investments ........................ 20,000

Dec. 31 Stock Investments ............................... 95,000

Revenue from Investment in
Batchelor Corp.
($380,000 X 25%) ........................ 95,000

(b) Investment in Batchelor, January 1 ...................... $150,000

Less: Dividend received ....................................... (20,000)
Plus: Share of reported income .......................... 95,000
Investment in Batchelor, December 31 ................ $225,000
EXERCISE E-5

2010
1. Mar. 18 Stock Investments ................................ 504,000
Cash (300,000 X 12% X $14) .......... 504,000

June 30 Cash ....................................................... 9,000

Dividend Revenue
($75,000 X 12%) ........................... 9,000

Dec. 31 Market Adjustment

Available-for-Sale .............................. 72,000
Unrealized Gain or LossEquity
($576,000 $504,000) ................. 72,000

2. Jan. 1 Stock Investments ................................ 82,500

Cash (30,000 X 25% X $11) ............ 82,500

June 15 Cash ....................................................... 8,750

Stock Investments
($35,000 X 25%) ........................... 8,750

Dec. 31 Stock Investments ................................ 30,000

Revenue from Investment in
Gatos Corp. ($120,000 X 25%)...... 30,000