Oregon Co. had purchased 376 shares of Washington Co. for $51 each this year and

Question

Oregon Co. had purchased 376 shares of Washington Co. for $51 each this year and classified the investment as a trading security. Oregon Co. sold 154 shares of the stock for $55 each. At year-end, the price per share of the Washington Co. stock had dropped to $34.

Prepare the journal entries for these transactions and any year-end adjustments. (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 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

(To record the purchase.)

(To record the sale.)

(To record the fair value.)

Account Titles and Explanation

Debit

Credit

(To record the purchase.)

(To record the sale.)

(To record the fair value.)

Explanation / Answer

A)

Trading Shares A/c Dr. (376*$51)               $19,176

           To Bank A/c                                                     $19,176

(Being Purchase of shares are recorded)

B)

Bank A/c (154*$55)Dr                                                     $8,470

    To Profit on on sale of sharess A/c                                      $616

    To Trading Shares A/c                                                          $7,854

(Being Sale of shares and the difference of cost and sale transfer to Profiit and loss account )

c)

Loss on fair valuation of shares A/c Dr                                   $3,774

   To Trading Shares A/c [(376-154)*$(51-34)]                                          $3,774

(Being Shares are revalued by taking into account 34 reduction in value of stock and the difference of 1$7 transfer to profit and loss account)

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