Question: Harter company which began operations in 2009 invests its idle

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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