Fairbanks Corporation purchased 400 shares of Sherman Inc. common stock for $13,200 (Fairbanks does not have significant influence). During the year, Sherman paid a cash dividend of $3.25 per share. At year-end, Sherman stock was selling for $34.50 per share. Prepare Fairbanks' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment. (Assume a zero balance in the Fair Value Adjustment account.)

(a) Dr Equity Investments (Trading) $13,200

Cr Cash $13,200

(b) Dr Cash $1,300

Cr Dividend Revenue $1,300

(c) Dr Fair Value Adjustment (Trading) $600

Cr Unrealized Holding Gain or Loss-Income $600

Explanation:

Preparation of Fairbanks' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment.

(a) Dr Equity Investments (Trading) $13,200

Cr Cash $13,200

(To record the purchase of the investment)

(b) Dr Cash $1,300

Cr Dividend Revenue $1,300

(400*$3.25 per share)

(To record dividends received)

(c) Dr Fair Value Adjustment (Trading) $600

Cr Unrealized Holding Gain or Loss-Income $600

[(400*$34.50 per share)-$13,200]

(To record the fair value adjustment)

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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