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Stock investment transactions, trading securities Zeus Investments Inc. is a regional investment company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Zeus Investments Inc., which has a fiscal year ending on December 31: Year 1 Feb. 14. Purchased 4,800 shares of Apollo Inc. as a trading security at 126 per share plus a brokerage commission of $192. Apr. 1. Purchased 2,300 shares of Ares Inc. as a trading security at $19 per share plus a brokerage commission of $92. June 1. Sold 600 shares of Apollo Inc. for $32 per share less a $100 brokerage commission. 27 Received an annual dividend of $0.20 per share on Apollo Inc. Stock. Dec. 31. The portfolio of trading securities was adjusted to fair values of $33 and $18.50 per share for Apollo Inc. and Ares Inc., respectively. Year 2 Mar. 14. Purchased 1,200 shares of Athena Inc. as a trading security at $65 per .share plus a $120 brokerage commission. June 26. Received an annual dividend of $0.21 per share on Apollo Inc. stock. July 30. Sold 480 shares of Athena Inc. for $60 per share less a $50 brokerage commission. Dec. 31. The portfolio of trading securities had a cost of $200,032 and a fair value of $188,000, requiring a credit balance in Valuation Allowance for Trading Investments of $12,032 ($188,000−$200,032). Thus, the debit balance from December 31, Year 1, is to be adjusted to the new balance. Instructions 1. Journalize the entries to record these transactions. 2. Prepare the investment-related current asset balance sheet presentation for Zeus Investments Inc. on December 31, Year 2. 3. How are unrealized gains or losses on trading investments presented in the financial statements of Zeus Investments Inc.?

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 15, Problem 15.2BPR
Textbook Problem

Stock investment transactions, trading securities

Zeus Investments Inc. is a regional investment company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Zeus Investments Inc., which has a fiscal year ending on December 31:

Year 1  
Feb. 14. Purchased 4,800 shares of Apollo Inc. as a trading security at 126 per share plus a brokerage commission of $192.
Apr. 1. Purchased 2,300 shares of Ares Inc. as a trading security at $19 per share plus a brokerage commission of $92.
June 1. Sold 600 shares of Apollo Inc. for $32 per share less a $100 brokerage commission.
27 Received an annual dividend of $0.20 per share on Apollo Inc. Stock.
Dec. 31. The portfolio of trading securities was adjusted to fair values of $33 and $18.50 per share for Apollo Inc. and Ares Inc., respectively.
Year 2  
Mar. 14. Purchased 1,200 shares of Athena Inc. as a trading security at $65 per .share plus a $120 brokerage commission.
June 26. Received an annual dividend of $0.21 per share on Apollo Inc. stock.
July 30. Sold 480 shares of Athena Inc. for $60 per share less a $50 brokerage commission.
Dec. 31. The portfolio of trading securities had a cost of $200,032 and a fair value of $188,000, requiring a credit balance in Valuation Allowance for Trading Investments of $12,032 ($188,000−$200,032). Thus, the debit balance from December 31, Year 1, is to be adjusted to the new balance.

Instructions

  1. 1. Journalize the entries to record these transactions.
  2. 2. Prepare the investment-related current asset balance sheet presentation for Zeus Investments Inc. on December 31, Year 2.
  3. 3. How are unrealized gains or losses on trading investments presented in the financial statements of Zeus Investments Inc.?

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Chapter 15 Solutions

Accounting
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