prepare the investment-related entries on pert company's books for 2009
To prepare the investment-related entries on PERT Company's books for 2009, you need to follow these steps:
1. Gather information: Obtain all the necessary information about the investments made by PERT Company during 2009. This includes details such as the type of investments, the date of purchase, the cost of each investment, any dividends received, and any changes in the market value of the investments.
2. Classify the investments: Determine the nature of the investments made by PERT Company. Common types of investments include stocks, bonds, mutual funds, real estate, and certificates of deposit (CDs).
3. Determine accounting method: Decide whether PERT Company will account for its investments using the cost method or the equity method. The cost method involves recording the initial purchase cost of the investment, while the equity method involves recording a proportional share of the investee's profits or losses.
4. Initial investment entry: For each investment made in 2009, create an initial journal entry to record the purchase. Debit the applicable investment account and credit the cash or accounts payable account, depending on whether the investment was paid in cash or on credit.
5. Dividend entry: If PERT Company received any dividends from its investments during 2009, create a journal entry to record the dividend income. Debit the cash account and credit the dividend income account.
6. Mark-to-market adjustment: If there were any changes in the market value of the investments during 2009, you need to adjust the investment accounts accordingly. Debit or credit the appropriate investment account and record the corresponding gain or loss.
7. Annual valuation adjustment: At the end of the year, review the investments' market value and adjust their carrying value if necessary. This step ensures that the investments are properly reported on the balance sheet.
8. Financial statement presentation: Finally, ensure that the investment-related entries are properly reflected in the financial statements. Include the investments on the balance sheet and disclose any significant information related to the investments in the footnotes.
It's important to note that this explanation is a general guideline for preparing investment-related entries. The specific entries and accounting methods may vary based on the specific circumstances and accounting standards applicable to PERT Company. It is advisable to consult with a professional accountant or financial advisor to ensure accurate and compliant reporting.