Question

Harter Company, which began operations in 2009, invests its idle cash in trading securities. The following transactions relate to its short-term investments in its trading securities.
2009
Mar. 10 Purchased 900 shares of Timex at $28.00 per share plus a $125 commission.
May 7 Purchased 2,500 shares of MTV at $37.00 per share plus a $578 commission.
Sept. 1 Purchased 780 shares of UPS at $7.00 per share plus a $200 commission.
2010
Apr. 26 Sold 2,500 shares of MTV at $35.50 per share less a $295 commission.
Apr. 27 Sold 780 shares of UPS at $10.50 per share less a $103 commission.
June 2 Purchased 1,600 shares of SPW at $34.00 per share plus a $444 commission.
June 14 Purchased 1,600 shares of Wal-Mart at $20.00 per share plus a $290 commission.
2011
Jan. 28 Purchased 3,400 shares of PepsiCo at $38.00 per share plus a $400 commission.
Jan. 31 Sold 1,600 shares of SPW at $29.00 per share less a $250 commission.
Aug. 22 Sold 900 shares of Timex at $26.25 per share less a $420 commission.
Sept. 3 Purchased 1,500 shares of Vodaphone at $47.50 per share plus a $600 commission.
Oct. 9 Sold 1,600 shares of Wal-Mart at $22.50 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, 2011, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities when PepsiCo’s share price is $36.00 and Vodaphone’s share price is $44.00. (Assume the Fair Value Adjustment—Trading account had an unadjusted balance of zero.)


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  • CreatedMarch 18, 2015
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