Horngren's Accounting (11th Edition)
Horngren's Accounting (11th Edition)
11th Edition
ISBN: 9780133856781
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Chapter 15, Problem E15.15E
To determine

Concept Introduction: Trading securities refer to those securities which are held for trading purposes. In other words we can say that investments in debt or equity securities to actively trade for profit in the short-period of time are known as trading securities.

Requirement 1;

To prepare: Journal entries for investment transactions.

Main solution:

Date Accounts Title Debit Credit
Dec. 6, 2016 Marketable Securities $24200  
  Cash   $24200
       
Dec. 23, 2016 Cash $1210  
  Dividend Revenue   $1210
       
Dec.31, 2016 Unrealized Holding Loss on Trading Securities $1100  
  Marketable Securities   $1100
       
Jan.27, 2017 Cash $23760  
  Marketable Securities   $23100
  Realized Gain on Trading Securities   $660

To determine

Requirement 2;

To prepare: Classification of stock investment in the balance sheet at December 31, 2016.

Main solution:

Balance Sheet (Partial)
As at December 31, 2016
Assets  
Current asset;  
Marketable Securities – Held as trading securities $23100

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