Presented below is information related to the purchases of common stock by Sunla

Question

Presented below is information related to the purchases of common stock by Sunland Company during 2017.

Cost
(at purchase date)

Fair Value
(at December 31)

(Assume a zero balance for any Fair Value Adjustment account.)

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Account Titles and Explanation

Debit

Credit

(a)

(b)

Cost
(at purchase date)

Fair Value
(at December 31)

Investment in Arroyo Company stock $92,000 $70,000 Investment in Lee Corporation stock 241,000 289,000 Investment in Woods Inc. stock 180,000 190,000     Total $513,000 $549,000

Explanation / Answer

Journal Entries Sr. No Date ACCT Title and explanation Debit Credit a) Dec - 31, 2017 Investment in Securities $36,000            To Unrealized Gain (loss) in investment $36,000 (To Adjustment for fair value of investment) (Gain = $ 549,000 - 513,000 = $ 36,000) b) Dec - 31, 2017 " No Entry" $0 $0 (Note: If ther is fair value than there is no change in value and no journal entry required for that)

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