TraderTrader Investments completed the following investment transactions during
ID: 2524233 • Letter: T
Question
TraderTrader
Investments completed the following investment transactions during 2018:
Requirement 1. Journalize Trader's investment transactions. Explanations are not required. ?(Record debits? first, then credits. Exclude explanations from journal entries.
Jan.? 14: Purchased 900 shares of Velcon ?stock, paying $55 per share. The investment represents 2% ownership in Velcon's voting stock.
Trader does not have significant influence over Velcon.
Trader intends to hold the investment for the indefinite future.
Date
Accounts
Debit
Credit
Jan. 14
Unrealized Holding Gain—Available-for-Sale
49,500
Cash
Aug.? 22: Received a cash dividend of $ 0.34 per share on the Velcon stock.
Date
Accounts
Debit
Credit
Aug. 22
Cash
306
Dividend Revenue
Dec.? 31: Adjusted the investment to its current market value of $53 per share.
Date
Accounts
Debit
Credit
Dec. 31
Cash
47,700
Loss on Disposal
1,800
Unrealized Holding Loss—Available-for-Sale
49,500
Dec.? 31: Velcon reported net income of $180,000 for the year ended 2018.
Date
Accounts
Debit
Credit
Dec. 31
No entry required
Requirement 2. Classify and prepare a partial balance sheet for Trader?'s Velcon investment as of December? 31, 2018.
?(Use a minus sign or parentheses to enter a loss. If a box is not used in the balance? sheet, leave the box? empty; do not select a label or enter a? zero.)
Trader Investments
Balance Sheet (Partial)
December 31, 2018
Current Assets:
Long-term Assets:
Stockholders' Equity
Accumulated Other Comprehensive Income:
Requirement 3. Prepare a partial income statement for Trader Investments for year ended December? 31, 2018.
?(Use a minus sign or parentheses to enter a? loss.)
Trader Investments
Income Statement (Partial)
For the Year Ended December 31, 2018
Other Income and (Expenses):
Date
Accounts
Debit
Credit
Jan. 14
Unrealized Holding Gain—Available-for-Sale
49,500
Cash
Explanation / Answer
Date Accounts Title Dr Cr 14-Jan Investment in AFS Securities $49,500 Cash (900*55) $49,500 22-Aug Cash 306 Dividend Revenue (900*.34) 306 31-Dec Unrealized Loss on AFS securities $1,800 Fair value Adjustment-AFS $1,800 (900*2) If fair value adjustment account not used than use Investment in AFS Securities 31-Dec No entry required Trader Investments Balance Sheet (Partial) 31-Dec-18 Current Assets: Long-term Assets: Investment in AFS Securities $49,500 Fair value Adjustment-AFS ($1,800) Net Investment in AFS Securities $47,700 Stockholders' Equity Accumulated Other Comprehensive Income: Unrealized Loss on AFS securities -1800 Trader Investments Income Statement (Partial) For the Year Ended December 31, 2018 Other Income and (Expenses): Dividend Revenue $306 If any doubt please comment
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