Last Unguaranteed Financial Inc. purchased the following trading securities duri
ID: 2419516 • Letter: L
Question
Last Unguaranteed Financial Inc. purchased the following trading securities during 2014, its first year of operations: Name Number of Shares Cost Arden Enterprises Inc. 5,shares $150,000 French Broad Industries Inc. 2,750 shares 66,000 Pisgah Construction Inc. 1,600 shares $104,000 Total $320,000 The market price per share for the trading security portfolio on Dec. 31, 2014, was as follows: Market price per share, Dec. 31, 2014 Arden Enterprises Inc. $ 34 French Broad Industries Inc. $ 26 Pisgah Construction Inc. $ 60 a. Provide the journal entry to adjust the trading security portfolio to fair value on Dec. 31, 2014. b. Assume the market prices of the portfolio were the same on Dec. 31, 2015, as they were on Dec. 31, 2014. What would be the journal entry to adjust the portfolio to fair value? Comment Fair value journal entries, trading investments Last Unguaranteed Financial Inc. purchased the following trading securities during 2014, its first year of operations: Name Number of Shares Cost Arden Enterprises Inc. 5,000 $150,000 French Broad Industries Inc. 2,750 66,000 Pisgah Construction Inc. 1,600 104,000 Total $320,000 The market price per share for the trading security portfolio on Dec. 31, 2014, was as follows: Market price per share, Dec. 31, 2014 Arden Enterprises Inc. $ 34 French Broad Industries Inc. $ 26 Pisgah Construction Inc. $ 60
a. Provide the journal entry to adjust the trading security portfolio to fair value on Dec. 31, 2014.
b. Assume the market prices of the portfolio were the same on Dec. 31, 2015, as they were on Dec. 31, 2014. What would be the journal entry to adjust the portfolio to fair value?
Explanation / Answer
Journal Entry
Trading Securities A/c dr. $17500
To Unrealised gain on trading securities A/c cr. $17500
Answer 2
Portfolio would be carried at the fair values prevailing on December 31, 2014, So no entry is required.
securities name No. of sharea Cost($) MArket Price/Fair VAlue ($) Arden Enterprises Inc 5000 150000 170000 French Broad Industries Inc 2750 66000 71500 Pisgah Construction Inc 1600 104000 96000 TOTAL 320000 337500Related Questions
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