Question

Harris Company, which began operations in 2013, invests its idle cash in trading securities. The following transactions relate to its short- term investments in its trading securities.
2013
Mar. 10 Purchased 2,400 shares of AOL at $ 59.15 per share plus a $ 1,545 commission.
May 7 Purchased 5,000 shares of MTV at $ 36.25 per share plus a $ 2,855 commission.
Sept. 1 Purchased 1,200 shares of UPS at $ 57.25 per share plus a $ 1,250 commission.
2014
Apr. 26 Sold 5,000 shares of MTV at $ 34.50 per share less a $ 2,050 commission.
Apr. 27 Sold 1,200 shares of UPS at $ 60.50 per share less an $ 1,788 commission.
June 2 Purchased 3,600 shares of SPW at $ 172 per share plus a $ 3,250 commission.
June 14 Purchased 900 shares of Walmart at $50.25 per share plus a $1,082 commission.
2015
Jan. 28 Purchased 2,000 shares of PepsiCo at $ 43 per share plus a $ 2,890 commission.
Jan. 31 Sold 3,600 shares of SPW at $ 168 per share less a $ 2,040 commission.
Aug. 22 Sold 2,400 shares of AOL at $ 56.75 per share less a $ 2,480 commission.
Sept. 3 Purchased 1,500 shares of Vodaphone at $40.50 per share plus an $ 1,680 commission.
Oct. 9 Sold 900 shares of Walmart at $ 53.75 per share less a $ 1,220 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 PepsiCo’s share price is $ 41 and Vodaphone’s share price is $ 37. (Assume the Fair Value Adjustment— Trading account had an unadjusted balance of zero.)



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  • CreatedNovember 26, 2013
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