Sheffield Corporation made the following purchases of investments during 2017, t

Question

Sheffield Corporation made the following purchases of investments during 2017, the first year in which Sheffield invested in equity securities: 1. On January 15, purchased 8,460 shares of Nimala Corp.'s common shares al $31.49 per share plus commission of $1,861. 2. On April 1, purchased 4,700 shares of Oxana Corp.'s common shares at $49 per share plus commission of $3,168. 3. On September 10, purchased 6,580 shares of WTA Corp.'s preferred shares at $24.91 per share plus commission of $2,735. On May 20, 2017, Sheffield solid 2,820 of the Nirmala common shares at a market price of $33 per share less brokerage commissions of $2,679. The year-end fair values per share were as follows: Nirmala $28; Oxana $52; and WTA $26. The chief accountant of Sheffield tells you that Sheffield Corporation holds these investments with the intention of selling them in order to earn short-term profits from appreciation in their prices and accounts for them using the PV-NI model , with no separate reporting of dividends and other types of FV-NI investment income and losses. Assume that Sheffield Corporation follows IFRS 9. Prepare the journal entries to record the three investments. (Credit account titles are automatically indented when the 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. Round answers to 0 decimal places, eg. 5, 275.) Credit an. 15 Date Account Titles and Explanation FAn investments investment income or tos Debit 2ss40s ass! 2ozoo PM Investments investment income or s assos Sep. 10 FV-NT investments investment income or s 643 Prepare the journal entry for the sale of the 2,820 Nirmala shares on May 20. (Credit account titles are automatically indented when the 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. Round answers to 0 decimal placeseg. 5, 275.) Debit Credit Date Account Tities and Explanation May 20 Prepare the adjusting entry needed on December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to o decimal placeseg. 5, 275.)

Explanation / Answer

The total purchase of each investment is
Nirmal corp=(8460*31.49)+1861=268266.40
Oxana corp=(4700*49)+3168=233468
WTA=(6580*24.91)+2735=166642.80

b)Gross selling price of shares=2820*33=93060
Commission=2679
Net amount from sales=93060-2679=90381
Cost of 2820 shares=(2820/8460)*268266=89422
Net gain=90381-89422=959

Cash(db)90381
Equity investement(available for sale)(cr) 89422
Gain on sale on investments(cr)959

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