Problem NO: 9

Kennedy Company has the following portfolio of available-for-sale securities at December 31, 2014.\nPercent Per Share Security Quantity Interest Cost P

Kennedy Company has the following portfolio of available-for-sale securities at December 31, 2014.

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Percent Per Share Security Quantity Interest Cost Price

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Frank, Inc. 2,000 shares 8% $11 $16

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Ellis Corp. 5,000 shares 14% 23 19

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Mendota Company 4,000 shares 2% 31 24

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Instructions

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(a) What should be reported on Kennedy’s December 31, 2014, balance sheet relative to these long-term available-for-sale securities?

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On December 31, 2015, Kennedy’s portfolio of available-for-sale securities consisted of the following common stocks. Percent Per Share

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Security Quantity Interest Cost Price

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Ellis Corp. 5,000 shares 14% $23 $28

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Mendota Company 4,000 shares 2% 31 23

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Mendota Company 2,000 shares 1% 25 23

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At the end of 2015, Kennedy Company changed its intent relative to its investment in Frank, Inc. and reclassified the shares to trading securities status when the shares were selling for $8 per share.

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(b) What should be reported on the face of Kennedy’s December 31, 2015, balance sheet relative to available-for-sale securities investments? What should be reported to reflect the transactions above in Kennedy’s 2015 income statement?

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