Lopez Company began operations in 2006. Since then, it has reported the followin

Question

Lopez Company began operations in 2006. Since then, it has reported the following gains and losses for its investments in trading securities on the income statement: At January 1, 2009. Lopez owned the following trading securities: During 2009, the following events occurred: Sold 5,000 shares of AGH for $170,000. Acquired 1.000 shares of Norton Common for $40 per share. Brokerage commissions totaled $1,000. At December 31,2009. the fair values for Lopez's trading securities were: AGH Common, $28 per share DEL Preferred, $110 per share Pratt Bonds, $1.020 per bond Norton Common, $42 per share Required : Prepare a schedule which shows the balance in the Securities Fair Value Adjustment (Trading) at December 31. 2008 (after the adjusting entry for 2008 is made). (10%) Prepare the adjusting entry, if necessary. to record the proper valuation of the trading securities portfolio as of December 31. 2009. (10%)

Explanation / Answer

Gains(losses) from sale of trading securities 15,000.00 (20,000.00) 14,000.00 Unrealized holding losses on valuation (25,000.00) (30,000.00) of trading securities Unrealized holding gain on valuation 10,000.00 of trading securities Balance in unrealized gain balance (10,000.00) (10,000.00) (16,000.00) Balance in unrealized gain balance (36,000.00) AGH DEL Pratt Norton Balance on Jan 2009 450,000.00 210,000.00 115,000.00 Sale(5000 shares) 170,000.00 Cost of these shares 150,000.00 Gain on sale of shares 20,000.00 Purchase of Shares 40,000.00 Fair Value of securities 280,000.00 220,000.00 102,000.00 42,000.00 Unrealized gain (20,000.00) 10,000.00 (13,000.00) 2,000.00 Total Unrealized gain (21,000.00) Add: Previous Balance (36,000.00) Total Unrealized gain (57,000.00) Journal Entry : Unrealized Holding gain              57,000        Securities Fair Value Adjustment          57,000

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.