Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 15, Problem 17E
(a)
To determine
To journalize: The year-end valuation of trading securities transaction
(b)
To determine
Explain the journal entry that would be entered, if the fair value in 2017 was the same as that in 2016.
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Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations:
Please see the attachment for details:
The market price per share for the available-for-sale security portfolio on December 31,Year 1, was as follows:
Please see the attachment for details:
a. Provide the journal entry to adjust the available-for-sale security portfolio to fair value on December 31, Year 1.b. Describe the income statement impact from the December 31, Year 1, journal entry.
Last Unguaranteed Financial Inc. purchased the following trading securities during Year 1, its first year of operations:
Please see the attachment for details:
The market price per share for the trading security portfolio on December 31, Year 1, was as follows:
Please see the attachment for details:
a. Provide the journal entry to adjust the trading security portfolio to fair value on December 31, Year 1.b. Assume that the market prices of the portfolio were the same on December 31, Year 2,as they were on December 31, Year 1. What would be the journal entry to adjust the portfolio to fair value?
Targett Company had no short-term investments prior to the year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017.
Required:
Prepare journal entries to record the preceding transactions and events.
Prepare a table to compare the year-end cost and fair values of Targett’s short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $26.50, PepsiCo, $46.50; and Xerox, $13.75. (hint Cost=$164,220)
Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in the available-for-sale securities. (hint Dr. Unrealized Loss-Equity $4,470)
How do these short-term investments affect Targett’s (a) income statement for year 2017 and (b) the equity section of its balance sheet at year-end 2017?
Chapter 15 Solutions
Financial Accounting
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