Help with Problem C-1A Thank You If the 18 million net unrealized losses are not

Question

Help with Problem C-1A

Thank You

If the 18 million net unrealized losses are not reported in the income statement, in which statement are they reported, if any? Explain. Prepare journal entries to record these short-term investment activities for the years shown. (Ignore any year-end adjusting entries.) On December 31, 2015, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities when HCA's share price $36 and Black & Decker's share price is $43.50. (Assume the Fair Value Adjustment-Trading account had an unadjusted balance of zero.)

Explanation / Answer

Journal entries

To Cash

(800*26 +125)

To Cash

( 220*44.25 +578)

To Cash

(750*7.50 +200)

To Cash

(1600*30 +444)

To Cash

(3400*34 +420)

to Trading securties - Lucent

(2200*42 - 420)

To Cash

(1200*47.50 +595)

Date Description Debit Credit 2013 Jan 20 Trading securities $20,925

To Cash

(800*26 +125)

$20,925 Feb 9 Trading securities - lucent $97,928

To Cash

( 220*44.25 +578)

$97,928 Oct 12 Trading securties Z- seven $5825

To Cash

(750*7.50 +200)

$5825 2014 April 15 Cash $22,915 To Trading securities $20,925 To Gain on sale     1990 July 5 Cash $7585 To Trading securities $5825 To Gain on sale 1760 july 22 Trading securities - hunter corp $48,444

To Cash

(1600*30 +444)

$48,444 Aug 19 Trading securtiies - Donna Karane $33,140 To Cash $33,140 2015 Feb 27 Trading securities - HCA $116,020

To Cash

(3400*34 +420)

$116,020 Mar 3 Cash $39,750 Loss on sale    8694 To Trading securities - hunter corp $48,444 jun21 Cash $91,980 Loss on sale    5,948

to Trading securties - Lucent

(2200*42 - 420)

$97,928 june 30 Trading securities - black & decker $57,595

To Cash

(1200*47.50 +595)

$57,595 Nov 1 Cash $32,541 Loss on sale       599 To Trading securities - Donna karan $33,140 Dec 31 Adjustment Trading securities - HCA $6380 To unrealised gain or loss $6380 Unrealised gain or loss $5395 to Trading securities - Black & Decker $5395

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