Ryder Company, which began operations in 2011, invests its idle cash in trading

Question

Ryder Company, which began operations in 2011, invests its idle cash in trading securities. The following transactions are from its short-term investments in its trading securities.

2011
Jan. 20 Purchased 800 shares of Ford Motor Co. at $27 per share plus a $120 commission.
Feb. 9 Purchased 2,700 shares of Lucent at $30 per share plus a $190 commission.
Oct. 12 Purchased 720 shares of Z-Seven at $7.60 per share plus a $95 commission.

2012
Apr. 15 Sold 800 shares of Ford Motor Co. at $30 per share less a $295 commission.
July 5 Sold 720 shares of Z-Seven at $11.00 per share less a $95 commission.
July 22 Purchased 1,800 shares of Hunt Corp. at $32 per share plus a $225 commission.
Aug. 19 Purchased 1,600 shares of Donna Karan at $14 per share plus a $105 commission.

2013
Feb. 27 Purchased 3,800 shares of HCA at $37 per share plus a $440 commission.
Mar. 3 Sold 1,800 shares of Hunt at $27 per share less a $125 commission.
June 21 Sold 2,700 shares of Lucent at $27.75 per share less a $32 commission.
June 30 Purchased 1,400 shares of Black & Decker at $47.50 per share plus a $595 commission.
Nov. 1 Sold 1,600 shares of Donna Karan at $23.20 per share less a $124 commission.


1.Prepare journal entries to record these short-term investment activities for the years shown. (Ignore any year-end adjusting entries.)
2. On December 31, 2013, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities when HCA

Explanation / Answer

1. Prepare journal entries to record these short-term investment activities for the years shown.
2011
Jan. 20 Purchased 1,000 shares of Ford Motor Co. at $27 per share plus a $120 commission.
Dr Trading securities 27,120 [(1,000 x $27) + $120]
Cr Cash 27,120

Feb. 9 Purchased 2,800 shares of Lucent at $30 per share plus a $190 commission.
Dr Trading securities 84,190
Cr Cash 84,190

Oct. 12 Purchased 780 shares of Z-Seven at $7.60 per share plus a $100 commission.
Dr Trading securities 6,028
Cr Cash 6,028

2012
Apr. 15 Sold 1,000 shares of Ford Motor Co. at $31 per share less a $295 commission.
Dr Cash 30,705 [(1,000 x $31) - $295]
Cr Trading securities 27,120
Cr Gain on sale of trading securities 3,585

July 5 Sold 780 shares of Z-Seven at $10.75 per share less a $90 commission.
Dr Cash 8,295
Cr Trading securities 6,028
Cr Gain on sale of trading securities 2,267

July 22 Purchased 1,700 shares of Hunt Corp. at $33 per share plus a $230 commission.
Dr Trading securities 56,330
Cr Cash 56,330

Aug. 19 Purchased 1,800 shares of Donna Karan at $15 per share plus a $105 commission.
Dr Trading securities 27,105
Cr Cash 27,105

2013
Feb. 27 Purchased 3,900 shares of HCA at $33 per share plus a $400 commission.
Dr Trading securities 129,100
Cr Cash 129,100

Mar. 3 Sold 1,700 shares of Hunt at $28 per share less a $130 commission.
Dr Cash 47,470
Dr Loss on sale of trading securities 8,860
Cr Trading securities 56,330

June 21 Sold 2,800 shares of Lucent at $27.75 per share less a $32 commission.
Dr Cash 77,668
Dr Loss on sale of trading securities 6,522
Cr Trading securities 84,190

June 30 Purchased 1,300 shares of Black & Decker at $47.50 per share plus a $600 commission.
Dr Trading securities 62,350
Cr Cash 62,350

Nov. 1 Sold 1,800 shares of Donna Karan at $19.75 per share less a $124 commission.
Dr Cash 35,426
Cr Trading securities 27,105
Cr Gain on sale of trading securities 8,321

2. On December 31, 2013, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities when HCA

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