day systems had no short term investments prior to 2011 it had the following transac 648172

Day Systems had no short term investments prior to 2011. It had the following transactions involving short term investments in available for sale securities during 2011.

Feb. 6 Purchased 1,700 shares of Nokia stock at $41.25 per share plus a $1,500 brokerage fee.

15 Paid $10,000 to buy six month U.S. Treasury bills (debt securities): $10,000 principal amount,

6% interest, securities dated February 15.

Apr. 7 Purchased 600 shares of Dell Co. stock at $39.50 per share plus a $627 brokerage fee.

June 2 Purchased 1,250 shares of Merck stock at $72.50 per share plus a $1,945 brokerage fee.

30 Received a $0.19 per share cash dividend on the Nokia shares.

Aug. 11 Sold 425 shares of Nokia stock at $46 per share less a $525 brokerage fee.

16 Received a check for principal and accrued interest on the U.S. Treasury bills purchased

February 15.

24 Received a $0.10 per share cash dividend on the Dell shares.

Nov. 9 Received a $0.20 per share cash dividend on the remaining Nokia shares.

Dec. 18 Received a $0.15 per share cash dividend on the Dell shares.

Required

1. Prepare journal entries to record the preceding transactions and events.

2. Prepare a table to compare the year end cost and fair values of the short term investments in available for sale securities. The year end fair values per share are: Nokia, $40.25; Dell, $41; and Merck, $59.

3. Prepare an adjusting entry, if necessary, to record the year end fair value adjustment for the portfolio of short term investments in available for sale securities.

4. Explain the balance sheet presentation of the fair value adjustment to Day’s short term investments.

5. How do these short term investments affect (a) its income statement for year 2011 and (b) the equity section of its balance sheet at the 2011 year end?