Tamarisk Company has the following portfolio of investment securities at Septemb

Question

Tamarisk Company has the following portfolio of investment securities at September 30, 2017, its last reporting date. Cost Fair Value $214,430 $198,730 151,300 191,640 Trading Securities Horton, Inc. common (5,230 shares) Monty, Inc. preferred (3,790 shares) Oakwood Corp. common (1,070 shares) 144,020 192,600 On October 10, 2017, the Horton shares were sold at a price of $56 per share. In addition, 3,080 shares of Patriot common stock were acquired at $58 per share on November 2, 2017. The December 31, 2017, fair values were Monty $119,050, Patriot $144,710, and the Oakwood $206,610 Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2017. (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 O for the amounts.) Date Account Titles and Explanation Credit

Explanation / Answer

It is assumed there was no previous balance in the fair value adjustments account and fair values are of last quarter, thus there should be a credit balance of $22020 in the fair value adjustment account as on September 30

Journal Entries

Cost Fair Value FV Adjustment Horton Inc 214430 198730 $ (15700) Monty Inc 144020 151300 $ (7280) Oakwood Inc 192600 191640 $ 960 Total $ (22020)

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