Kenseth Company has the following securities in its trading portfolio of securit

Question

Kenseth Company has the following securities in its trading portfolio of securities on December 31, 2013.

Investments (Trading) Cost/ Fair Value 1,500 shares of Gordon, Inc., Common-Cost: $99,400 Fair Value: $96,730

5,000 shares of Wallace Corp., Common, Cost- 190,600 Fair Value-186,010

400 shares of Martin, Inc., Preferred,Cost: 61,490 Fair Value: 62,900

Total Cost: $351,490 Total Fair Value: $345,640

All of the securities were purchased in 2013. In 2014, Kenseth completed the following securities transactions.

March 1 Sold the 1,500 shares of Gordon, Inc., Common, @ $47 less fees of $1,261.

April 1 Bought 700 shares of Earnhart Corp., Common, @ $79 plus fees of $1,366.

Kenseth Company’s portfolio of trading securities appeared as follows on December 31, 2014.

Investments (Trading) Cost /Fair Value 5,000 shares of Wallace Corp., Common. Cost:$190,600 Fair value: $186,010

700 shares of Earnhart Corp., Common. Cost 56,666 Fair Value: 52,436

400 shares of Martin, Inc., Preferred.Cost: 61,490 Fair value: 58,620

Total Cost:$308,756 Total Fair Value: $297,066

Prepare the general journal entries for Kenseth Company for: (a) The 2013 adjusting entry. (b) The sale of the Gordon stock. (c) The purchase of the Earnhart stock. (d) The 2014 adjusting entry for the trading portfolio.

Explanation / Answer

(a) The 2013 adjusting entry-

(b) The sale of the Gordon stock-

(c) The purchase of the Earnhart stock.-

d) The 2014 adjusting entry for the trading portfolio-

31/122/2013 Company No. of Share Cost Fair Value Gordon, Inc. 1500 $99,400.00 $96,730.00 Wallace Corp., 5000 $190,600.00 $186,010.00 Martin, Inc., pref. 400 $61,490.00 $62,900.00 Total 6900 $351,490.00 $345,640.00 31/12/2014 Company No. of Share Cost Fair Value Wallace Corp., 5000 $190,600.00 $186,010.00 Martin, Inc., pref. 400 $61,490.00 $58,620.00 Earnhart Corp., 700 $56,666.00 $52,436.00 Total 6100 $308,756.00 $297,066.00

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