Reference no: EM132953187

Question - Effective company had the following long-term investments at the beginning of the current year:

Investment in SMC preference shares, 12%

P200 par, 5,000 shares 1,200,000

Investment in Benguet ordinary shares, 10,000 shares 1,000,000

During the current year, the following transactions were completed:

1. Purchased 4,000 ordinary shares of ANA Company for P300,000.

2. Received 2,000ordinary shares of Benguet Company in lieu of a cash dividend of P10 per share.

On this date, Benguet ordinary share has a quoted market of P60.

3. Purchased 6,000 ordinary shares of ANA Company for 420,000.

4. Received semiannual dividend on SMC Company 12% preference share.

5. ANA ordinary share was split on a 2-for-1 basis.

6. Sold 8,000 ordinary shares of ANA Company at P85 less transaction costs of 5%. Use average approach.

Required -

a. Prepare journal entries to record the transactions.

b. Prepare summary of the portfolio of investments stating the number of shares and the corresponding cost.