Coraargest corrent asset on stanhr Roeporetron\'s balance sheet aletm alance She
ID: 340622 • Letter: C
Question
Coraargest corrent asset on stanhr Roeporetron's balance sheet aletm alance Sheet a hstmentin Tracling Securitic hents Consist of stock in other CorPoltions casL Stanford H93solamv walue vest At Stantord holds back the Shck inest these secon tics 497HD. Sure tments e of tradina Hretm activelyFor oit and Conv Them to Tas ithin bour to six mon B what wil Stuntora balance sncet at Deccmber 31,2ol6 C. what will Statement-2 repoct on the stanord teport on its 2otb incomc in. Irading SecuriticS nvestnmenf in urnalizt the salc and then shcw T-account as it aepcos aleprne atter the sve.Explanation / Answer
.A . Since the investment is held principally for selling them in near term, it should be classified as Trading Security.
.B. The security should be reported in the balance sheet at fair value ($9740)
.C. Unrealized gain of (9740-9350)=$390 should be included in income statement in earning in 2016
.D. T- Account:
T-Account
Investment in Trading securities
DEBIT
CREDIT
Cash
$9,350
Unrealized gain
$390
Closing balance
$9,740
.E.
JOURNAL ENTRY
Account Title
Debit
Credit
Cash
$9,480
Realized loss on trading securities
$260
(9740-9480)
Trading securities
$9,740
(To record sale of trading securities)
T-Account
Investment in Trading securities
DEBIT
CREDIT
Opening balance
$9,740
Cash
$9,480
Realized loss
$260
T-Account
Investment in Trading securities
DEBIT
CREDIT
Cash
$9,350
Unrealized gain
$390
Closing balance
$9,740
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