On December 21, 2020, Pearl Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $21,300 $20,300 $(1,000 ) Colorado Co. stock 9,100 8,200 (900 ) Buffaloes Co. stock 21,300 21,860 560 Total of portfolio $51,700 $50,360 (1,340 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,340 ) During 2021, Colorado Co. stock was sold for $8,650. The fair value of the stock on December 31, 2021, was Clemson Corp. stock—$20,390; Buffaloes Co. stock—$21,770. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
On December 21, 2020, Pearl Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $21,300 $20,300 $(1,000 ) Colorado Co. stock 9,100 8,200 (900 ) Buffaloes Co. stock 21,300 21,860 560 Total of portfolio $51,700 $50,360 (1,340 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,340 ) During 2021, Colorado Co. stock was sold for $8,650. The fair value of the stock on December 31, 2021, was Clemson Corp. stock—$20,390; Buffaloes Co. stock—$21,770. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 25E
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On December 21, 2020, Pearl Company provided you with the following information regarding its equity investments.
|
December 31, 2020
|
|||||||
|---|---|---|---|---|---|---|---|
|
Investments (Trading)
|
Cost
|
Fair Value
|
Unrealized Gain (Loss)
|
||||
|
Clemson Corp. stock
|
$21,300 | $20,300 | $(1,000 | ) | |||
|
Colorado Co. stock
|
9,100 | 8,200 | (900 | ) | |||
|
Buffaloes Co. stock
|
21,300 | 21,860 | 560 | ||||
|
Total of portfolio
|
$51,700 | $50,360 | (1,340 | ) | |||
|
Previous fair value adjustment balance
|
0 | ||||||
|
Fair value adjustment—Cr.
|
$(1,340 | ) |
During 2021, Colorado Co. stock was sold for $8,650. The fair value of the stock on December 31, 2021, was Clemson Corp. stock—$20,390; Buffaloes Co. stock—$21,770. None of the equity investments result in significant influence.
| (a) | Prepare the |
|
|---|---|---|
| (b) | Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. | |
| (c) | Prepare the adjusting journal entry needed on December 31, 2021. |
(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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