Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
26th Edition
ISBN: 9781305392373
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 15, Problem 15.16EX
(a)
To determine
Trading securities: These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts.
- Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The year-end valuation of trading securities transaction
(b)
To determine
To journalize: The purchase of stock investment transaction in the books of Incorporation JB.
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Students have asked these similar questions
Data related to available-for sale securities for Aetna Corporation for the Year 2016 is
provided below:
Mark-to-market value of available-for-sale securities, Ending
Amortized cost of available-for-sale securities, Beginning
Purchases of available-for-sale securities during the year
Amortized cost of available-for-sale securities, Ending
$8,000
$1,200
$3,000
$1,550
Mark-to-market
value of available-for-sale securities,
Beginning
$4,500
Additional information:
No dividend revenue or interest revenue earned or received during the
year.
No securities were sold, and no securities were matured during the year.
What would be the unrealized gain or loss for the year 2016?
a. $500 Unrealized gain
b. $1,300 Unrealized loss
c. $2,150 Unrealized gain
d. $1,800 Unrealized loss
An entity buys and sells securities expecting to earn profits on short-term differences in price. During 2016, the
entity purchased the following trading securities:
Security
A
Cost
195,000
300,000
660,000
Fair Value Dec. 31, 2016
225,000
162,000
678,000
Before any adjustments related to these trading securities, the entity had net income of P900,000.
What is the entity's net income after making any necessary trading security adjustments?
900,000
810,000
a.
b.
762,000
d. 948,000
C.
What would the net income be if the fair value of security B were P285,000?
a. 867,000
900,000
885,000
933,000
b
C.
d.
Investment in Trading and AFS Securities
A company purchases debt securities for $100,000 at the beginning of 2022. It classifies as trading securities and $60,000 as AFS securities. It sells the securities in 2023.
Required
For each of the following scenarios, indicate the net effect on income and other comprehensive income in each year 2022 and 2023. In each case, any unrealized decline in value below cost is expected to be
recovered and is attributed to market factors.
a.
Fair value, end of 2022
Selling price, 2023
Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI.
Income
OCI
5,000 ✓
(1,000) *
End of 2022 $
2023
b.
Trading securities AFS securities
$38,000
$65,000
43,000
64,000
Fair value, end of 2022
Selling price, 2023
(2,000)✓ $
5,000 x
End of 2022 $
2023
Trading securities AFS securities
$45,000
$56,000
42,000
68,000
Note: Use a negative sign with an answer to indicate the net effect amount decreases Income or OCI.
OCI
(4,000)✓
0…
Chapter 15 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
Ch. 15 - Why might a business invest cash in temporary...Ch. 15 - What causes a gain or loss on the sale of a bond...Ch. 15 - When is the equity method the appropriate...Ch. 15 - How does the accounting for a dividend received...Ch. 15 - Prob. 5DQCh. 15 - What is the major difference in the accounting for...Ch. 15 - Prob. 7DQCh. 15 - How would a debit balance in Unrealized Gain...Ch. 15 - What are the factors contributing to the trend...Ch. 15 - Prob. 10DQ
Ch. 15 - Prob. 15.1APECh. 15 - Bond investment transactions Journalize the...Ch. 15 - Prob. 15.2APECh. 15 - Stock investment transactions On September 12,...Ch. 15 - Prob. 15.3APECh. 15 - Prob. 15.3BPECh. 15 - Prob. 15.4APECh. 15 - Prob. 15.4BPECh. 15 - Prob. 15.5APECh. 15 - Prob. 15.5BPECh. 15 - Prob. 15.6APECh. 15 - Prob. 15.6BPECh. 15 - Prob. 15.1EXCh. 15 - Prob. 15.2EXCh. 15 - Prob. 15.3EXCh. 15 - Prob. 15.4EXCh. 15 - Prob. 15.5EXCh. 15 - Entries for investment in stock, receipt of...Ch. 15 - Prob. 15.7EXCh. 15 - Prob. 15.8EXCh. 15 - Entries for stock investments, dividends, and sale...Ch. 15 - Prob. 15.10EXCh. 15 - Prob. 15.11EXCh. 15 - Prob. 15.12EXCh. 15 - Prob. 15.13EXCh. 15 - Prob. 15.14EXCh. 15 - Prob. 15.15EXCh. 15 - Prob. 15.16EXCh. 15 - Fair value journal entries, trading investments...Ch. 15 - Prob. 15.18EXCh. 15 - Prob. 15.19EXCh. 15 - Prob. 15.20EXCh. 15 - Prob. 15.21EXCh. 15 - Prob. 15.22EXCh. 15 - Prob. 15.23EXCh. 15 - Prob. 15.24EXCh. 15 - Prob. 15.25EXCh. 15 - Prob. 15.26EXCh. 15 - Prob. 15.27EXCh. 15 - Prob. 15.28EXCh. 15 - Prob. 15.29EXCh. 15 - Prob. 15.1APRCh. 15 - Prob. 15.2APRCh. 15 - Stock Investment transaction, equity method and...Ch. 15 - Prob. 15.4APRCh. 15 - Prob. 15.1BPRCh. 15 - Prob. 15.2BPRCh. 15 - Stock investment transactions, equity method and...Ch. 15 - Prob. 15.4BPRCh. 15 - Selected transactions completed by Equinox...Ch. 15 - Benefits of fair value On July 16, 1998, Wyatt...Ch. 15 - International fair value accounting International...Ch. 15 - Prob. 15.3CPCh. 15 - Warren Buffett and "look-through" earnings...Ch. 15 - Prob. 15.5CP
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- Can you help me to calculate adjusted net income, adjusted net income if FV of security B were 285,000, value of held for trading securities as of 12/31/2020 and assuming these securities at measured at FVOCI, calculate the value of these financial assets as of 12/31/2020 Problem: ABC Corporation buys and sells securities expecting to earn profits on short term differences in price. during 2020, ABC Corporation purchased the following held for trading securities. Security A: Cost- 195,000; FV at 12/31/2020- 225,000 Security B: Cost- 300,000; FV at 12/31/2020- 162,000 Security C: Cost- 678,000; FV at 12/31/2020- 660,000 Before any adjustments related to these securities, ABC Corporation had net income of 900,000arrow_forwardOn January 1, 2016, a company's balance sheet reports its investments in debt securities as follows: Assets Investment in trading securities Investment in AFS securities Investment in HTM securities Equity Accumulated other comprehensive income: Unrealized gains (losses) on AFS securities Additional information: a. The HTM securities are $210,000 face value securities purchased on January 1, 2014, at a yield of 4%. The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%. $165,000 95,000 217,922 $4,500 b. The trading securities on hand on January 1 were sold in 2016 for $185,000. c. More trading securities were purchased for $105,000. They are still on hand at December 31, 2016, and have a fair value of $120,000. d. AFS securities, originally purchased for $27,000 with a carrying value of $24,000 as of January 1, 2016, were sold for $32,000. e. AFS securities on hand at December 31, 2016, have a fair value of $85,000 $20,000 $15,000…arrow_forward1 During 2020, LOVE Company purchased marketable equity securities for P1,850,000 to be held as trading investments. In 2020, the entity appropriately reported an unrealized loss of 200,000 in the income statement. There was no change during 2021 in the composition of the portfolio of trading securities. Pertinent data on December 31, 2021 are: Security Cost Market A 600,000 700,000 B 450,000 400,000 C 800,000 900,000o What amount of unrealized gain on these securities should be included in the 2021 income statement? a. 350,000 b. 150,000 c. 550,000 d. 0arrow_forward
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