Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter D, Problem D.8EX
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
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Valuing Trading Securities at Fair Value
On January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $65,000, and the fair value was $66,700.
Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments.
aluing Trading Securities at Fair Value
On January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $59,000, and the fair value was $60,400.
Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments.
Dec. 31
On January 1, Valuation Allowance for Trading The balance sheet caption used to report temporary or long-term investments in stocks or bonds held as either trading, available-for-sale, held-to-maturity or equity method securities. Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $66,800, and the fair value was $68,000.
Prepare the December 31 adjusting journal entry to record the Changes in the fair value of equity or debt securities for a period.unrealized gain or loss on trading investments.
Dec. 31
Chapter D Solutions
Corporate Financial Accounting
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- On December 31, the cost of trading securities portfolio was $64,200, and the fair value was $67,000. The adjusting entry to record the unrealized gain or loss on trading investments would included a : Group of answer choices debit Unrealized Loss on Trading Investments debit Unrealized Gain on Trading Investments credit Unrealized Loss on Trading Investments credit Unrealized Gain on Trading Investmentsarrow_forwardOn January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $379,600, and the fair value was $358,900. Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments. Refer to the Chart of Accounts for exact wording of account titles.arrow_forwardOn January 1, the valuation allowance for trading investments account has a zero balance. On December 31, the cost of trading securities portfolio was $64,200, and the fair value was $67,000. Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments.arrow_forward
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