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.

Fair Value

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

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

Prepare the general journal entries for Kenseth Company for:

Investments (Trading) Cost

Fair Value

1,500 shares of Gordon, Inc., Common $105,000 $101,890 5,000 shares of Wallace Corp., Common 186,800 182,420 400 shares of Martin, Inc., Preferred 67,590 69,250 $359,390 $353,560

Explanation / Answer

a. Investment held for trading are valued at cost or fair value whichever is less

b.

c.

d.

Working notes:

1. Investments for trading are valued at cost or fair value which ever is less. So the investments which are already on cost basis and have high fair value, wont be valued

2. Wallace corporation is alreadyvalued on 2013 and cost and fair value is same as on 2014. So it wont be valued again

Sr. No. Particulars Debit Credit 1 Profit & loss a/c 3110 Investment in gordon company 3110 (being investment valued at fair value) 2. Profit & loss a/c 4380 Investment in Wallace Corp. 4380 (being investment valued at fair value)

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