2017 an. 20 Purchased 800 shares of Ford Motor Co. at $28 per share plus a $125

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2017 an. 20 Purchased 800 shares of Ford Motor Co. at $28 per share plus a $125 commission. Feb. 9 Purchased 2,980 shares of Lucent at $31 per share plus a $200 commission. Oct. 12 Purchased 720 shares of Z-Seven at $7.60 per share plus a $95 commission. Dec. 31 Fair value of the short-term investments in trading securities is $121,300. 2018 Apr. 15 Sold 800 shares of Ford Motor Co. at $30 per share less a $298 commission. Duly 5 Sold 720 shares of Z-Seven at $10.75 per share less a $95 commission. July 22 Purchased 1,800 shares of Hunt Corp. at $39 per share plus a $225 commission. Aug. 19 Purchased 1,600 shares of Donna Karan at $50.00 per share plus a $110 commission. Dec. 31 Fair value of the short-term investments in trading securities is $236,855 2019 Feb. 27 Purchased 3,700 shares of HCA at $32 per share plus a $420 commission. Mar. 3 Sold 1,800 shares of Hunt at $34 per share less a $125 commission June 21 Sold 2,900 shares of Lucent at $28.75 per share less a $42 commission . June 30 Purchased 1,300 shares of Black & Decker at $47.50 per share plus a $595 commission. Nov. 1 Sold 1,600 shares of Donna Karan at $50.00 per share less a $129 coomission. Dec. 31 Fair value of the short-term investments in trading securities is $185,90. Required: Prepare journal entries to record these short-term investment activities for the years shown. On Decer adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities (If transaction/event, select "No journal entry required in the first account field. Do not round your in Complete this question by entering your answers in the tabs below. Prev 5of 5 Next

Explanation / Answer

Journal entries Date Account titles and explanation Debit Credit 2017 Jan 20. Short term investment-Ford motor 22525 Cash (800*28)+125 22525 (Purchased 800 shares of ford Motor co) Feb 9. Short term investment-Lucent 90100 Cash (2900*31)+200 90100 (Purchased 2900 shares of Lucent) Oct 12. Short term investment-Z seven 5567 Cash (720*7.60)+95 5567 (Purchased 720 shares of Z-Seven) Dec 31. Fair value adjustment-Trading 3108 Unrealised gain (Note:1) 3108 (Adjustment for fair value changes) 2018 Apr 15. Cash (800*30)-290 23710 Short term investment-Ford motor 22525 Gain on short term investment 1185 (Sold 800 shares of ford Motor co) July 5. Cash (720*10.75)-95 7645 Short term investment-Z seven 5567 Gain on sale of short term investment 2078 (Sold 720 shares of Z-Seven) July 22. Short term investment-Hunt corp 70425 Cash (1800*39)+225 70425 (Purchased 1800 shares of Hunt corp) Aug 19. Short term investment-Donna Karan 80110 Cash (1600*50)+110 80110 (Purchased 1600 shares of Donna karan) Dec 31. Unrealised loss (Note:2) 3780 Fair value adjustment-Trading 3780 (Adjustment for fair value changes) 2019 Feb 27. Short term investment-HCA 118820 Cash (3700*32)+420 118820 (Purchased 3700 shares of HCA) Mar 3. Cash (1800*34)-125 61075 Loss on sale of short term investment 9350 Short term investment-Hunt corp 70425 (Sold 1800 shares of Hunt corp) June 21. Cash (2900*28.75)-42 83333 Loss on sale of short term investment 6767 Short term investment-Lucent 90100 (Sold 2900 shares of Lucent) June 30. Short term investment-Black & Decker 62345 Cash (1300*47.50)+595 62345 (Purchased 1300 shares of Black & Decker) Nov 1. Cash (1600*50)-129 79871 Loss on sale of short term investment 239 Short term investment-Donna Karan 80110 (Sold 1600 shares of Donna karan) Dec 31. Fair value adjustment-Trading 4735 Unrealised gain (Note:3) 4735 (Adjustment for fair value changes) Notes: 1. Book value of investments=22525+90100+5567=118192 Fair value=121300 Unrealised gain=121300-118192=3108 2. Book value of investments: Lucent 90100 Hunt corp 70425 Donna Karan 80110 Total 240635 Fair value=236855 Unrealised loss=240635-236855=3780 3. Book value of investments: HCA 118820 Black & Decker 62345 Total 181165 Fair value=185900 Unrealised gain=185900-181165=4735

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