Problem #1 Puppy Company has the following securities in its investment portfoli
ID: 2477600 • Letter: P
Question
Problem #1 Puppy Company has the following securities in its investment portfolio on December 31, 2015 (all securities were purchased in 2015) FMV per Number of Cost Per share at Shares Share Dec. 31, 2015 Trading Securities ("Trading"): Anderson Co. common stock 5,100 $18.00 $25.00 Munter Ltd. Common stock 10,000 40.00 30.00 Available for Sale Securities ("AFS"): King Company preferred stock 6,200 25.00 52.00 During 2016, Puppy Company completed the following security transactions: Number of Selling Price Purchase Price Shares Per Share Per Share Jan. 15 Sold 1/2 of the Anderson Co. common stock $23.00 Feb. 3 Sold all the Munter Ltd. Common stock 80.00 Apr. 17 Purchased Castle Co. common stock 1,000.00 $33.50 AFS Apr. 30 Sold remaining Anderson Co. stock 25.00 Jun. 10 Purchase McGrath Co. preferred stock 4,300 43.00 AFS Sept. 14 Purchased Oakwood common stock 1,500 175.00 AFS Oct. 31 Purchased Mountain Co. common stock 3,500 40.00 Trading Dec. 1 Purchased McGraw preferred stock 500 185.00 Trading At December 31, 2016, the FMV per share of the investments were: FMV per share at Dec. 31, 2016 Trading Securities: Mountain Co. common stock $32.00 McGraw Co. preferred stock 205.00 Available for Sale Securities: King Company preferred stock 45.00 Castle Co. common stock 35.00 McGrath Co. preferred stock 39.00 Oakwood common stock 188.00 Required: 1. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2015. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income. 2. Prepare the journal entries to record the 2016 investment transactions. 3. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2016. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income. Problem #1 Puppy Company has the following securities in its investment portfolio on December 31, 2015 (all securities were purchased in 2015) FMV per Number of Cost Per share at Shares Share Dec. 31, 2015 Trading Securities ("Trading"): Anderson Co. common stock 5,100 $18.00 $25.00 Munter Ltd. Common stock 10,000 40.00 30.00 Available for Sale Securities ("AFS"): King Company preferred stock 6,200 25.00 52.00 During 2016, Puppy Company completed the following security transactions: Number of Selling Price Purchase Price Shares Per Share Per Share Jan. 15 Sold 1/2 of the Anderson Co. common stock $23.00 Feb. 3 Sold all the Munter Ltd. Common stock 80.00 Apr. 17 Purchased Castle Co. common stock 1,000.00 $33.50 AFS Apr. 30 Sold remaining Anderson Co. stock 25.00 Jun. 10 Purchase McGrath Co. preferred stock 4,300 43.00 AFS Sept. 14 Purchased Oakwood common stock 1,500 175.00 AFS Oct. 31 Purchased Mountain Co. common stock 3,500 40.00 Trading Dec. 1 Purchased McGraw preferred stock 500 185.00 Trading At December 31, 2016, the FMV per share of the investments were: FMV per share at Dec. 31, 2016 Trading Securities: Mountain Co. common stock $32.00 McGraw Co. preferred stock 205.00 Available for Sale Securities: King Company preferred stock 45.00 Castle Co. common stock 35.00 McGrath Co. preferred stock 39.00 Oakwood common stock 188.00 Required: 1. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2015. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income. 2. Prepare the journal entries to record the 2016 investment transactions. 3. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2016. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income.Explanation / Answer
The journal entry to record the fair market adjustments for trading and available for sale securities at 31st December, 2015 is as under:
The journal entry to record the fair market adjustments for trading and available for sale securities at 31st December, 2015 is as under:
31st Dec., 2015 Unrealized Holding gain or loss-Loss $ 64,300 Securities-Trading $64,300 (Being recording loss for adjusting the trading securities to fair value) 31st Dec., 2015 Securities-Available for sale $ 167,400 Unrealized Holding gain or loss-Income $167,400 (Being recording proit for adjusting the securities available for sale to fair value)Related Questions
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