In 2013, Kentucky Inc. purchased stock as follows:

(a) Acquired 2,000 shares of Gallen Corp. common stock (par value $20) in exchange for 1,200 shares of Kentucky Inc. preferred stock (par value $30). The preferred stock had a market value of $75 per share on the date of the exchange.
(b) Purchased 800 shares of Carlton Corp. common stock (par value $10) at $70 per share, plus a brokerage fee of $800.

At December 31, 2013, the market values of the securities were as follows:

The investments in common stock are classified by Kentucky Inc. as available-for-sale securities accounted for by the cost method. The fiscal year of Kentucky ends on December 31.

(1) Prepare all entries relating to the investments in common stock for 2013.
(2) Prepare the entry to record the sale of 200 shares of Carlton Corp. common stock on January 15, 2014, at $74 per share.
(3) Prepare the entry to reclassify the remaining 600 shares of Carlton Corp. common stock from available-for-sale securities to trading securities on January 31, 2014. The stock was selling at $67 per share on that date.

Question

In 2013, Kentucky Inc. purchased stock as follows:

(a)	Acquired 2,000 shares of Gallen Corp. common stock (par value $20) in exchange for 1,200 shares of Kentucky Inc. preferred stock (par value $30). The preferred stock had a market value of $75 per share on the date of the exchange.
(b)	Purchased 800 shares of Carlton Corp. common stock (par value $10) at $70 per share, plus a brokerage fee of $800.

At December 31, 2013, the market values of the securities were as follows:

The investments in common stock are classified by Kentucky Inc. as available-for-sale securities accounted for by the cost method. The fiscal year of Kentucky ends on December 31.

(1)	Prepare all entries relating to the investments in common stock for 2013.
(2)	Prepare the entry to record the sale of 200 shares of Carlton Corp. common stock on January 15, 2014, at $74 per share.
(3)	Prepare the entry to reclassify the remaining 600 shares of Carlton Corp. common stock from available-for-sale securities to trading securities on January 31, 2014. The stock was selling at $67 per share on that date.

Quizplus · Accepted Answer

The Answer of In 2013, Kentucky Inc. purchased stock as follows:

(a)	Acquired 2,000 shares of Gallen Corp. common stock (par value $20) in exchange for 1,200 shares of Kentucky Inc. preferred stock (par value $30). The preferred stock had a market value of $75 per share on the date of the exchange.
(b)	Purchased 800 shares of Carlton Corp. common stock (par value $10) at $70 per share, plus a brokerage fee of $800.

At December 31, 2013, the market values of the securities were as follows:

The investments in common stock are classified by Kentucky Inc. as available-for-sale securities accounted for by the cost method. The fiscal year of Kentucky ends on December 31.

(1)	Prepare all entries relating to the investments in common stock for 2013.
(2)	Prepare the entry to record the sale of 200 shares of Carlton Corp. common stock on January 15, 2014, at $74 per share.
(3)	Prepare the entry to reclassify the remaining 600 shares of Carlton Corp. common stock from available-for-sale securities to trading securities on January 31, 2014. The stock was selling at $67 per share on that date.

In 2013, Kentucky Inc. Purchased Stock as Follows