On August 22, 2004, Burgess Company purchased 20,000 common shares of Radius Measurement, Inc. at a price of $8 per share. Brokerage commissions, taxes, and transfer fees totaled an additional $800. At December 31, 2004, Burgess still owned the securities but the aggregate market value had declined to $148,000. This is a long-term investment.
A. Using the format presented in this chapter, show the entries that would be made to the accounting system to record the purchase of these securities.
B. Show how this investment should be reported in the year-end 2004 financial statements by completing the table of information below.
C. Assume the investment in common stock was sold on January 23, 2005 at a price of $171,400. Use the format presented in this chapter to show the entry to record this event. Assume the investment has always been on the books as available-for-salesecurities.