Weston Company had the following stock investments with insignificant influence in its portfolio at December 31, Year 1. Weston had several investment transactions during year 2.(1) Determine the amount Weston should report on its December 31, Year 1 balance sheet for its stock investments.(2) Determine the amount Weston should report on its December 31, Year 2 balance sheet for its stock investments.(3) Prepare the necessary adjusting entry to record the fair value adjustment at December 31, Year 2.Stock InvestmentsCostFair Value40,000 shares of Beach common stock$ 497,500$ 488,90015,000 shares of Danfield common stock410,200412,60018,000 shares of Cardinal common stock399,600382,500Jan. 22Sold 9,000 shares of Cardinal common stock for $202,150. Nov. 01Purchased 12,000 shares of Cliff
common stock for $223,950. The shares represent a 10% ownership.Dec. 31At December 31, Year 2, the fair values of its investments are: Beach, $502,500; Danfield, $411,800; Cardinal, $203,100; Cliff, $224,750.
What will be an ideal response?
| Year 1: Stock Investments | Cost | Fair Value |
| 40,000 shares of Beach common stock | $ 497,500 | $ 488,900 |
| 15,000 shares of Danfield common stock | 410,200 | 412,600 |
| 18,000 shares of Cardinal common stock | 399,600 | 382,500 |
| Totals | $1,307,300 | $1,284,000 |
| Year 2: Stock Investments | Cost | Fair Value |
| 40,000 shares of Beach common stock | $ 497,500 | $ 502,500 |
| 15,000 shares of Danfield common stock | 410,200 | 411,800 |
| 9,000 shares of Cardinal common stock | 199,800 | 203,100 |
| 12,000 shares of Cliff common stock | 223,950 | 224,750 |
| Totals | $1,331,450 | $1,342,150 |
| Year 2 | Fair Value Adjustment-Stock | 10,700 | ? |
| ? | Unrealized Gain-Income | ? | 10,700 |
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