Required informationProblem 15-3A Debt investments in available-for-sale securities; unrealized and realized gains and losses LO P3Skip to question [The following information applies to the questions displayed below.] Stoll Co.'s long-term available-for-sale portfolio at the start of this year consists of the following. Available-for-Sale SecuritiesCostFair ValueCompany A bonds$533,600 $492,000 Company B notes 159,310 150,000 Company C bonds 661,900 641,950 Stoll enters into the following transactions involving its available-for-sale debt securities this year. Jan. 29 Sold one-half of the Company B notes for $78,430.July 6 Purchased bonds of Company X for $120,800.Nov. 13 Purchased notes of Company Z for $267,100.Dec. 9 Sold all of the bonds of Company A for $524,100.The fair values at December 31 are B, $82,500; C, $609,100; X, $118,000; and Z, $279,000.I'm trying to figure out where am I going wrong at? Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair valueadjustment for the long-term investments in available-for-sale securities.NoDateGeneral JournalDebitCredit1Jan. 29Cash78,430 OLoss on sale of debt investments1,225 VDebt investments - AFS79,655Jul 06Debt investments - AFS120,800 OCash120,800 O3Nov. 13Debt investments - AFS267,100Cash267,100 O4Dec. 9Cash524,100 OLoss on sale of debt investmentsDebt investments - AFSFair value adjustment - AFSUnrealized loss - Equity5Dec. 312. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-salesecurities.Fair Value Adjustment Computation -Available-for-Sale SecuritiesUnrealizedGain orDecember 31 AFS SecuritiesCostFair ValueAmountLoss?Company B notes79,6552$82,500 VCompany C bonds661,900609,100 OCompany X bonds120,800118,000 OCompany Z notes267,100279,000 VTotal$1,129,455$1,088,600$40,855 OLossRequired 2 December 31 Balance in the Fair Value Adjustment accountCredit VBalance at beginning of year in the Fair Value Adjustment account70,860 OCreditDecember 31 required adjustment to the Fair Value Adjustment accountDebit

A long-term investment is an account kept by the company for investment purposes on a long-term…

Answered: Stoll Co.'s long-term…

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 2MC: During 2021, Anthony Company purchased debt securities as a long-term investment and classified them...

See similar textbooks

Required information

Problem 15-3A Debt investments in available-for-sale securities; unrealized and realized gains and losses LO P3

Skip to question

[The following information applies to the questions displayed below.]

Stoll Co.'s long-term available-for-sale portfolio at the start of this year consists of the following.

Available-for-Sale Securities	Cost	Fair Value
Company A bonds	$	533,600	$	492,000
Company B notes		159,310		150,000
Company C bonds		661,900		641,950

Stoll enters into the following transactions involving its available-for-sale debt securities this year.

Jan.	29	Sold one-half of the Company B notes for $78,430.
July	6	Purchased bonds of Company X for $120,800.
Nov.	13	Purchased notes of Company Z for $267,100.
Dec.	9	Sold all of the bonds of Company A for $524,100.

The fair values at December 31 are B, $82,500; C, $609,100; X, $118,000; and Z, $279,000.

I'm trying to figure out where am I going wrong at?

Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value
adjustment for the long-term investments in available-for-sale securities.
No
Date
General Journal
Debit
Credit
1
Jan. 29
Cash
78,430 O
Loss on sale of debt investments
1,225 V
Debt investments - AFS
79,655
Jul 06
Debt investments - AFS
120,800 O
Cash
120,800 O
3
Nov. 13
Debt investments - AFS
267,100
Cash
267,100 O
4
Dec. 9
Cash
524,100 O
Loss on sale of debt investments
Debt investments - AFS
Fair value adjustment - AFS
Unrealized loss - Equity
5
Dec. 31
2.

Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale
securities.
Fair Value Adjustment Computation -
Available-for-Sale Securities
Unrealized
Gain or
December 31 AFS Securities
Cost
Fair Value
Amount
Loss?
Company B notes
79,655
2$
82,500 V
Company C bonds
661,900
609,100 O
Company X bonds
120,800
118,000 O
Company Z notes
267,100
279,000 V
Total
$
1,129,455
$
1,088,600
$
40,855 O
Loss
Required 2 December 31 Balance in the Fair Value Adjustment account
Credit V
Balance at beginning of year in the Fair Value Adjustment account
70,860 O
Credit
December 31 required adjustment to the Fair Value Adjustment account
Debit

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.