Prepare the adjusting entry

The following are selected transactions that may affect stockholders’ equity.1. Paid the cash dividend declared in a prior year.2. Recorded a retained earnings appropriation.3. Recorded accrued interest earned on a note receivable from a major shareholder.4. Purchased treasury stock. (The company uses the cost method.)5. Recorded salary expense accrual.6. Declared a cash dividend on preferred stock.7. Declared and distributed a 5% stock dividend.8. Issued $1 par value common stock (current market price of $75 per share) in exchange for land.InstructionsIn the table below, indicate the effect each of the eight transactions has on the financial statement elements listed. Use the following code:I = Increase D = Decrease NE = Noeffect

he cost of the trading securities of Munoz Company at December 31, 2014, is $64,000. At December 31, 2014, the fair value of the securities is $59,000.

Prepare the adjusting entry to record the securities at fair value.

Solution:

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