On July 1, 2018, Wolfpack Corporation purchased securities which it intends to b
ID: 2542075 • Letter: O
Question
On July 1, 2018, Wolfpack Corporation purchased securities which it intends to buy and sell frequently. These securities consisted of (a) Todd Corporation 10%, 5-year bonds with a face value of $20,000 which were purchased for $18,500 and (b) 300 shares of Cornett Company common stock which were purchased at $40 per share. Assume that on December 31, 2018, the investment in Todd Corporation bonds has a market value of $22,300, and the investment in Cornett Company stock has a market value of $10,500. Required: Prepare the year-end journal entry to record the unrealized gain or loss. Refer to the Chart of Accounts for the exact wording of the answer choices for text entries.
Prepare the journal entry to record the unrealized gain or loss on December 31, 2018. Refer to the Chart of Accounts for the exact wording of the answer choices for text entries.
Explanation / Answer
Date Accounts and Explanation Debit Credit 31-12-2018 Trading Securities 2300 Unrealized gain on Trading securities 2300 ( To record the unrealized gain on market securities due to increase in market price) Calculations: Todd corporation: Purchase price 18500 Market price 22300 Gain(22300-18500) 3800 Cornett Company: Purchase price (300*40) 12000 Market price 10500 Loss(10500-12000) -1500 Net off gain /( loss) from marketable securities (3800-1500) 2300
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.