Vela Corporation, which has begun investing in trading securities, engaged in the following transactions:
Jan. 6 Purchased 7,000 shares of IBM stock, $30 per share.
Feb. 15 Purchased 9,000 shares of Quaker Oats, $22 per share.
At year-end on June 30, IBM was trading at $40 per share, and Quaker Oats was trading at $18 per share.
Prepare the journal entries to record the purchases. Then prepare the journal entry to record the necessary year-end adjustment. Include a schedule of the trading portfolio cost and market value in the explanation. Also prepare the journal entry to record the sale of all the Quaker Oats shares on August 20 for $16 per share. Is the last entry affected by the June 30 adjustment? Explain.

  • CreatedSeptember 10, 2014
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