Connect Access Card for Financial Accounting: Information and Decisions
8th Edition
ISBN: 9781259662966
Author: John J Wild
Publisher: McGraw-Hill Education
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Question
(a) An investor purchased the share of Neptune
Corp on 1 Jan 2017 and held the investment
until
31 December 2021. Details of Neptune Corp's
share price and dividend payout during the
period of investment are as follows:
Date
Share Price
01 jan 2017
8.50
31 Dec 2017
8.80
31 Dec 2018
9.15
31 Dec 2019
9.22
31 Dec 2020
8.87
31 Dec 2021
9.12
Compute:
(i) Arithmetic rate of return for 2017, 2018, 2019,
2020 and 2021 separately.
(ii) Geometric average rate of return for the
entire period of investment from 2017 until
2021.
(iii) Logarithmic returns for the entire period of
investment from 2017 until 2021.
(b) Discuss four differences between investing
in stocks and investing in bonds.
Dividend
0.30
0.35
0.38
0.22
0.30
Purchases of common stock by jamison december 31 2016
Company Invested In
Cost
Fair Value
Readfield
125,000
115,500
Lee
100,000
80,000
Stern
250,000
300,000
Jones
180,000
190,000
These are classified as trading security by jamison, who uses the portfolio approach
During 2017 lee company's stock was sold for 102,000 and jamison purchased common stock of earnhart company at a cost of 163,300
at the end of 2017
the fair values of the trading securities are as follows
readfield 111,800
stern 310,000
jones 171,600
earnhart 159,250
a) make the adjustment entry for the portfolio at december 31 2016 to report the fair value of investment in the balance sheet
b) prepare the journal entry to record the sale of lee company's stock in jamisons book in 2017
c) prepare the journal entry to record the purchase of earnharts's common stock by jamison
d) calculate the fair value of the portfolio as of december 31 2017
e) make the adjustment entry for the portfolio at december…
During 2017, Latvia Company purchased trading securities with the following cost and market value on December 31, 2017.
Security Cost Market Value
A – 1 000 shares 200 000 300 000
B – 10 000 shares 1 700 000 1 600 000
C – 20 000 shares 3 100 000 2 900 000
5 000 000 4 800 000
The entity sold 10 000 shares of security B on January 15, 2018, for P 150 per share.
1. What amount of unrealized gain or loss should be reported in income statement for 2017?
2. What amount should be reported as loss on sale of trading investment of 2018?
Chapter C Solutions
Connect Access Card for Financial Accounting: Information and Decisions
Ch. C - Under what two conditions should investments be...Ch. C - Prob. 2DQCh. C - Prob. 3DQCh. C - Identify the three classes of debt investments and...Ch. C - Prob. 5DQCh. C - Prob. 6DQCh. C - Prob. 7DQCh. C - Prob. 8DQCh. C - Prob. 9DQCh. C - Prob. 10DQ
Ch. C - Prob. 11DQCh. C - Prob. 12DQCh. C - Prob. 13DQCh. C - Prob. 14DQCh. C - Prob. 15DQCh. C - Prob. 16DQCh. C - Prob. 17DQCh. C - Which of the following statements a through g are...Ch. C - Prob. 2QSCh. C - Prob. 3QSCh. C - Prob. 4QSCh. C - Prob. 5QSCh. C - Prob. 6QSCh. C - Prob. 7QSCh. C - Prob. 8QSCh. C - Prob. 9QSCh. C - Prob. 10QSCh. C - Prob. 11QSCh. C - Prob. 12QSCh. C - Prob. 13QSCh. C - Prob. 14QSCh. C - Prob. 15QSCh. C - Prob. 16QSCh. C - Prob. 17QSCh. C - Prob. 1ECh. C - Prob. 2ECh. C - Prob. 3ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Prob. 6ECh. C - Prob. 7ECh. C - Prob. 8ECh. C - Prob. 9ECh. C - Prob. 10ECh. C - Prob. 12ECh. C - Prob. 13ECh. C - Prob. 14ECh. C - Prob. 15ECh. C - Prob. 16ECh. C - Prob. 2PSACh. C - Prob. 6PSACh. C - Prob. 2PSBCh. C - Prob. 3PSBCh. C - Prob. 5PSBCh. C - Prob. 6PSBCh. C - Prob. CSPCh. C - Prob. 4BTNCh. C - Prob. 9BTN
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- Current Attempt in Progress Some of Sheridan Corporation's investments in debt securities are classified as trading securities and some are classified as available- for-sale. The cost and fair value of each category at December 31, 2022, were as follows. Cost Fair Value Unrealized Gain (Loss) Trading securities $95,500 $84,000 Available-for-sale securities $60,000 $63,000 $(11,500) $3,000 At December 31, 2021, the Fair Value Adjustment-Trading account had a debit balance of $2,600, and the Fair Value Adjustment- Available-for-Sale account had a credit balance of $7,800. Prepare the required journal entries for each group of securities for December 31, 2022. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Trading securities: Debit Credit 1. Unrealized Gain or…arrow_forward#4 PLEASE ANSWER PARTS D) and E) Recording and Reporting Equity Investment: FV-NI Adjust FVA at Sale and Year-End On November 1, 2020, Drucker Co. acquired the following investments in equity securities measured at FV‑NI.Kelly Corporation—750 shares of common stock (no-par) at $60 per share. Keefe Corporation—450 shares preferred stock ($10 par) at $20 per share. On December 31, 2020, the company’s year-end, the quoted market prices were as follows: Kelly Corporation common stock, $52, and Keefe Corporation preferred stock, $24. Following are the data for 2021. Mar. 2, 2021 Dividends per share, declared and paid: Kelly Corp., $1, and Keefe Corp., $0.50.Oct. 1, 2021 Sold 150 shares of Keefe Corporation preferred stock at $25 per share.Dec. 31, 2021 Fair values: Kelly common, $46 per share, Keefe preferred, $26 per share.arrow_forwardTrading Securities Pear Investments began operations in 2020 and invests in securities classified as trading securities. During 2020, it entered into the following trading security transactions: Purchased 20,000 shares of ABC common stock at $38 per share Purchased 32,000 shares of XYZ common stock at $17 per share At December 31, 2020, ABC common stock was trading at $39.50 per share and XYZ common stock was trading at $16.50 per share. Required: 1. Prepare the necessary adjusting entry to value the trading securities at fair market value. 2. CONCEPTUAL CONNECTION What is the income statement effect of this adjusting entry?arrow_forward
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