Question

Carlsville Company, which began operations in 2013, invests its idle cash in trading securities. The following transactions are from its short-term investments in its trading securities.
2013
Jan. 20 Purchased 800 shares of Ford Motor Co. at $ 26 per share plus a $ 125 commission.
Feb. 9 Purchased 2,200 shares of Lucent at $ 44.25 per share plus a $ 578 commission.
Oct. 12 Purchased 750 shares of Z- Seven at $ 7.50 per share plus a $ 200 commission.
2014
Apr. 15 Sold 800 shares of Ford Motor Co. at $ 29 per share less a $ 285 commission.
July 5 Sold 750 shares of Z-Seven at $ 10.25 per share less a $ 102.50 commission.
July 22 Purchased 1,600 shares of Hunt Corp. at $ 30 per share plus a $ 444 commission.
Aug. 19 Purchased 1,800 shares of Donna Karan at $ 18.25 per share plus a $ 290 commission.
2015
Feb. 27 Purchased 3,400 shares of HCA at $ 34 per share plus a $ 420 commission.
Mar. 3 Sold 1,600 shares of Hunt at $ 25 per share less a $ 250 commission.
June 21 Sold 2,200 shares of Lucent at $ 42 per share less a $ 420 commission.
June 30 Purchased 1,200 shares of Black & Decker at $ 47.50 per share plus a $ 595 commission.
Nov. 1 Sold 1,800 shares of Donna Karan at $ 18.25 per share less a $ 309 commission.

Required
1. Prepare journal entries to record these short- term investment activities for the years shown. (Ignore any year- end adjusting entries.)
2. On December 31, 2015, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities when HCA’s share price is $ 36 and Black & Decker’s share price is $ 43.50. (Assume the Fair Value Adjustment—Trading account had an unadjusted balance of zero.)



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  • CreatedNovember 26, 2013
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