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Diversified Services, Inc., offers a variety of business services, including financial services through its escrow division. Diversified's fiscal year ends on December 31. The only securities held by Diversified at December 1 were 12 million common shares of Shelby Laminations, Inc., purchased in November for $50 million and classified as available-for-sale. Diversified entered into the following investment activities during the last month of 2013 and the first week of 2014: 2013 Dec. 1 Purchased $30 million of 12% bonds of Vince-Gill Amusement Corporation and $24 million of 10% bonds of Eastern Waste Disposal Corporation, both at face value and both to be held until they mature. Interest on each bond issued is payable semiannually on

Diversified Services, Inc., offers a variety of business services, including financial services through its escrow division. Diversified's fiscal year ends on December 31. The only securities held by Diversified at December 1 were 12 million common shares of Shelby Laminations, Inc., purchased in November for $50 million and classified as available-for-sale. Diversified entered into the following investment activities during the last month of 2013 and the first week of 2014: 2013 Dec. 1 Purchased $30 million of 12% bonds of Vince-Gill Amusement Corporation and $24 million of 10% bonds of Eastern Waste Disposal Corporation, both at face value and both to be held until they mature. Interest on each bond issued is payable semiannually on

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 3PB
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Diversified Services, Inc., offers a variety of business services, including financial services through its escrow division. Diversified's fiscal year ends on December 31. The only securities held by Diversified at December 1 were 12 million common shares of Shelby Laminations, Inc., purchased in November for $50 million and classified as available-for-sale. Diversified entered into the following investment activities during the last month of 2013 and the first week of 2014: 2013 Dec. 1 Dec. 9 Dec.29 Dec.30 Dec.31 Purchased $30 million of 12% bonds of Vince-Gill Amusement Corporation and $24 million of 10% bonds of Eastern Waste Disposal Corporation, both at face value and both to be held until they mature. Interest on each bond issued is payable semiannually on November 30 and May 31. Sold on-half of the Shelby Laminations common shares for $26 million. Received cash dividends of $1.5 million from the Shelby Laminations common shares. Purchased UPS's common shares for $5.8 million as trading securities hoping to earn profits on short-term differences in prices Recorded the necessary adjusting entry(s) relating to the investments The year-end market price of the Shelby Laminations common stock was $4.25 per share. The fair values of the bond investments were $32 million for Vince-Gill Amusement Corporation and $20 million for Eastern Waste Disposal Corporation. A sharp rise in short-term interest rates on the last day of the year caused the fair value of the UPS's shares to fall to $5.7 million. 2014 Jan. 7 Sold the remaining Shelby Laminations common shares for $27 million. Required: 1. Prepare the appropriate journal entry for each transaction or event
Transcribed Image Text:Diversified Services, Inc., offers a variety of business services, including financial services through its escrow division. Diversified's fiscal year ends on December 31. The only securities held by Diversified at December 1 were 12 million common shares of Shelby Laminations, Inc., purchased in November for $50 million and classified as available-for-sale. Diversified entered into the following investment activities during the last month of 2013 and the first week of 2014: 2013 Dec. 1 Dec. 9 Dec.29 Dec.30 Dec.31 Purchased $30 million of 12% bonds of Vince-Gill Amusement Corporation and $24 million of 10% bonds of Eastern Waste Disposal Corporation, both at face value and both to be held until they mature. Interest on each bond issued is payable semiannually on November 30 and May 31. Sold on-half of the Shelby Laminations common shares for $26 million. Received cash dividends of $1.5 million from the Shelby Laminations common shares. Purchased UPS's common shares for $5.8 million as trading securities hoping to earn profits on short-term differences in prices Recorded the necessary adjusting entry(s) relating to the investments The year-end market price of the Shelby Laminations common stock was $4.25 per share. The fair values of the bond investments were $32 million for Vince-Gill Amusement Corporation and $20 million for Eastern Waste Disposal Corporation. A sharp rise in short-term interest rates on the last day of the year caused the fair value of the UPS's shares to fall to $5.7 million. 2014 Jan. 7 Sold the remaining Shelby Laminations common shares for $27 million. Required: 1. Prepare the appropriate journal entry for each transaction or event
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