On December 21, 2017, Waterway Company provided you with the following informati
ID: 2549128 • Letter: O
Question
On December 21, 2017, Waterway Company provided you with the following information regarding its equity investments.
December 31, 2017
Investments (Trading)
Cost
Fair Value
Unrealized Gain (Loss)
During 2018, Colorado Company stock was sold for $8,750. The fair value of the stock on December 31, 2018, was Clemson Corp. stock—$20,210; Buffaloes Co. stock—$21,650. None of the equity investments result in significant influence.
December 31, 2017
Investments (Trading)
Cost
Fair Value
Unrealized Gain (Loss)
Clemson Corp. stock $21,200 $20,100 $(1,100 ) Colorado Co. stock 9,300 8,200 (1,100 ) Buffaloes Co. stock 21,200 21,740 540 Total of portfolio $51,700 $50,040 (1,660 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,660 )Explanation / Answer
Journal Entry Date Account Desription , Title Debit Credit 31/12/2018 Unrealized Holding Gain or Loss $1,660.00 a. Fair Value Adjustment $1,660.00 To Record for previous year Unrealized Gain/Loss adjustment 31/12/2018 Cash $8,750.00 b. Loss on sale of securities $550.00 Availlable for sale securities $9,300.00 To record sale of Colorodo Co. Stock 31/12/2018 Fair vlaue Adjustment $1,120.00 c. Unrealised Holding Gain or Loss $1,120.00 To Record Gain/Loss on fair Value changes Working Note Investment Cost FV Unrealised Gain Clemson Corp. Stock $21,200.00 $20,210.00 -$990.00 Buffaloes Stock $21,200.00 $21,650.00 $450.00 Total -$540.00 Previous Fair Value Adjustment $1,660.00 Securities Fair Value Adjustment for Current Year $1,120.00
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