Hampton Developments Had the Following Transactions Pertaining to Its Short-Term

Essay

Hampton Developments had the following transactions pertaining to its short-term equity investments. Hampton does not use an allowance account to record unrealized gains and losses, but $$\begin{array} { | l | l | } \hline \text { Jan. 1 } & \begin{array} { l } \text { Purchased 1,000 shares of Chapman Foods Ltd. for } \$ 50,000 \text { cash, plus brokerage } \\\text { fees of } \$ 550 . \text { The shares were classified as trading securities. }\end{array} \\\hline \text { June 1 } & \text { Received cash dividends of } \$ 3 \text { per share on the Chapman shares. } \\\hline \text { Sept. 15 } & \text { Sold } 500 \text { Chapman shares for } \$ 24,900 , \text { less brokerage fees of } \$ 100 . \\\hline \text { Dec. } 31 & \text { The fair value of the Chapman shares was } \$ 25,400 . \\\hline\end{array}$$ Required: 1. Prepare all the journal entries required for these transactions. 2. How will these transactions be reported on the statement of earnings ending on December 31?