Dow-Smith Co. bought 3,000 shares of Hong Kong common stock at $37; 600 shares of Beijing stock at $46.75; and 1,400 shares of Shanghai stock at $79—all as available-for-sale investments. At December 31, Hoover’s Online reports Hong Kong stock at $29.125, Beijing at $48.50, and Shanghai at $68.25.
❙ Required
1. Determine the cost and the market value of the long-term investment portfolio at December 31. (pp. 541–542)
2. Record Dow-Smith’s adjusting entry at December 31. (pp. 542–543)
3. What would Dow-Smith report on its income statement and balance sheet for the information given? Make the necessary disclosures. Ignore income tax. (pp. 542–543)
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