Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The
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Question:
Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on December 31, Year 1, was as follows:
Name | Number of Shares | Total Cost | Total Fair Value | ||||
Tornado Inc. | 1,250 | $16,750 | $18,590 | ||||
Tsunami Corp. | 700 | 22,960 | 25,030 | ||||
Typhoon Corp. | 200 | 6,400 | 6,080 | ||||
Total | $46,110 | $49,700 |
On June 12, Year 2, Hurricane purchased 600 shares of Rogue Wave Inc. at $32 per share plus a $140 brokerage commission.
a. Provide the journal entries to record the following:
- The adjustment of the available-for-sale security portfolio to fair value on December 31, Year 1.
- The June 12, Year 2, purchase of Rogue Wave Inc. stock.
Year 1, Dec. 31 | Valuation Allowance for Available-for-Sale Investments | ||
Unrealized Gain (Loss) on Available-for-Sale Investments | |||
Year 2, June 12 | Investments-Rogue Wave Inc. | ||
Cash |
Related Book For
Financial Accounting
ISBN: 978-1305088436
14th edition
Authors: Carl S. Warren, Jim Reeve, Jonathan Duchac
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