Last Unguaranteed Financial Inc. purchased the following trading securities duri

Question

Last Unguaranteed Financial Inc. purchased the following trading securities during 2016, its first year of operations:

The market price per share for the trading security portfolio on December 31, 2016, was as follows:

Market Price

per Share,

Dec. 31, 2016

Required:

none

X

Chart of Accounts

none

X

Journal

A. Provide the journal entry to adjust the trading security portfolio to fair value on December 31, 2016. Refer to the Chart of Accounts for exact wording of account titles. Be sure to enter the year as part of the date.

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JOURNAL

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2

Solution

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Points:

B. Assume the market prices of the portfolio were the same on December 31, 2017, as they were on December 31, 2016. What would be the journal entry to adjust the portfolio to fair value? If no entry is required, type "no entry required" and leave the amount box blank. Refer to the Chart of Accounts for exact wording of account titles. Be sure to enter the year as part of the date.

PAGE 10

JOURNAL

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2

Solution

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Name Number of Shares Cost Arden Enterprises Inc. 5,450 $152,600 French Broad Industries Inc. 2,670 64,080 Pisgah Construction Inc. 1,660 107,900 Total $324,580

Explanation / Answer

No. Of Shares Cost Cost per Share Market Price per Share-Dec31, 2016 Total Market Price Difference A B C = B/A D E = D X A F - E - B Arden Enterprises Inc.         5,450      152,600               28                               36          196,200           43,600 French Broad Industries Inc.         2,670        64,080               24                               27            72,090             8,010 Pisgah Construction Inc         1,660      107,900               65                               61          101,260           (6,640) Total      324,580          369,550           44,970 Answer A. Journal Entry Date Particulars Dr. Amt. Cr. Amt Dec. 31, Trading Investments                                                   Dr.      44,970 2016 To Unrealized Gain on Trading Investments        44,970 (Record the unrealized gain on Trading Investment) Answer B. Journal Entry Date Particulars Dr. Amt. Cr. Amt Dec. 31, No Entry 2017 Since market Value of trading Securities were same as Dec. 31, 2016

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