During the fourth quarter of 2016, Abbott, Inc., generated excess cash, which the company invested..

During the fourth quarter of 2016, Abbott, Inc., generated excess cash, which the company invested in trading securities as follows: Nov 16 Purchased 900 common shares as an investment in trading securities, paying $9 per share. Dec 16 Received cash dividend of $0.35 per share on the trading securities. Dec 31 Adjusted the trading securities to fair value of $5 per share. Requirements 1. Open T-accounts for Cash (including its beginning balance of $19,000), Investment in Trading Securities, Dividend Revenue, and Unrealized Gain (Loss) on Trading Securities. 2. Journalize the foregoing transactions and post to the T-accounts. 3. Show how to report the short-term investment on Abbott s balance sheet at December 31, 2016. 4. Show how to report whatever should appear on Abbott s income statement for the year ended December 31, 2016. 5. Abbott sold the trading securities for $6,300 on January 14, 2017. Journalize the sale. 6. Assume that the securities were classified as available-for-sale. Further, assume that the fair value was $10 per share on December 31, 2017, and $10.50 per share on January 1, 2018, when they were sold. Repeat steps 3-4 for 2016 and 2017, and journalize the sale of the se-curities on January 1, 2018. Follow the example in Exhibit 5-2.

 

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