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Asked Dec 20, 2019
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Last Unguaranteed Financial Inc. purchased the following trading securities during Year 1, its first year of operations:

Please see  the attachment for details:

The market price per share for the trading security portfolio on December 31, Year 1, was as follows:

Please see  the attachment for details:

a. Provide the journal entry to adjust the trading security portfolio to fair value on December 31, Year 1.
b. Assume that the market prices of the portfolio were the same on December 31, Year 2,as they were on December 31, Year 1. What would be the journal entry to adjust the portfolio to fair value?

Number of Shares
Name
Cost
Arden Enterprises Inc.
$150,000
5,000
French Broad Industries Inc.
2,750
66,000
Pisgah Construction Inc.
1,600
104,000
Total
$320,000
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Number of Shares Name Cost Arden Enterprises Inc. $150,000 5,000 French Broad Industries Inc. 2,750 66,000 Pisgah Construction Inc. 1,600 104,000 Total $320,000

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Market Price per Share,
Dec. 31, Year 1
Arden Enterprises Inc.
$34
French Broad Industries Inc.
26
Pisgah Construction Inc.
60
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Market Price per Share, Dec. 31, Year 1 Arden Enterprises Inc. $34 French Broad Industries Inc. 26 Pisgah Construction Inc. 60

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Expert Answer

Step 1

(a)

...
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Post Credit ($) Debit ($) Date Account Titles and Explanation Ref. December 31 Vahuation Allowance for Trading Investments Unrealized Gain on Trading Investments |To record unrealized gain on trading securities) 17,500 17,500 Table (1) Working Notes: Compute the fair value of the portfolio of the trading investment. Fair Market Fair Number of Security Market Value of Shares Value Investment Incorporation A Incorporation F Incorporation P 5,000 shares x 2,750 shares 1,600 shares $34 $170,000 71,500 96,000 $337,500 26 60 Total Compute the unrealized gain (loss) as on December 31. Details Amount (S) S337,500 (320,000) $17.500 Trading investments at fair value, December 31 (From Table-2) |Less: Trading investments at cost, December 31 Unrealized gain on trading investments

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