On January 1, 2020 Excellence Company made various investments in trading securities with the following cost and market value on December 31, 2020: Market value One preference share Two ordinary share Three ordinary share Cost 200,000 800,000 1,000,000 150,000 950,000 1,100,000 On January 20, 2021, the Two ordinary share is sold for P1,020,000. On December 31, 2021, the remaining trading securities have the following Market value: Market value One preference share Three ordinary share 200,000 1,070,000 Required: a.) Gain on sale on January 20, 2021 b.) Unrealized gain or loss be reported to the Income Statement for the Year- ended December 31, 2021

On January 1, 2020 Excellence Company made various investments in trading securities with the following cost and market value on December 31, 2020: Market value One preference share Two ordinary share Three ordinary share Cost 200,000 800,000 1,000,000 150,000 950,000 1,100,000 On January 20, 2021, the Two ordinary share is sold for P1,020,000. On December 31, 2021, the remaining trading securities have the following Market value: Market value One preference share Three ordinary share 200,000 1,070,000 Required: a.) Gain on sale on January 20, 2021 b.) Unrealized gain or loss be reported to the Income Statement for the Year- ended December 31, 2021

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 18E: Trading Securities Pear Investments began operations in 2020 and invests in securities classified as...

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Trading Securities Pear Investments began operations in 2020 and invests in securities classified as trading securities. During 2020, it entered into the following trading security transactions: Purchased 20,000 shares of ABC common stock at $38 per share Purchased 32,000 shares of XYZ common stock at $17 per share At December 31, 2020, ABC common stock was trading at $39.50 per share and XYZ common stock was trading at $16.50 per share. Required: 1. Prepare the necessary adjusting entry to value the trading securities at fair market value. 2. CONCEPTUAL CONNECTION What is the income statement effect of this adjusting entry?
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