During 2011 and 2012, Foley Co. made the following journal entries to account for transactions involving trading
Question:
During 2011 and 2012, Foley Co. made the following journal entries to account for transactions involving trading securities:
The beginning balance in Market Adjustment'Trading Securities was a $900 credit. There were no other entries in 2011.
There were no other entries in 2012.
Instructions:
For each incorrect entry, give the entry that should have been made. Assume the revenue approach is used. Ignore any premium or discount amortization on U.S. Treasurybonds.
Transcribed Image Text:
2011 (a) Nov. 1 Investment in Trading Securities-一7% US. Treasury Bonds 52.667 . . 52.667 To record the purchase of $50,000 of U.S. Treasury bonds at 102.50. Brokerage fees were $250. Interest is payable semiannualy on January I and Julyl (b) Dec. 3 Unrealized Increase/Decrease in Value of Available-for-Sale Securities 2.477 Market Adjustment Trading Securities 2.477 To record the decrease in fair value of the current investment securities based on the following data. Cost Market Market Adjustment Lawlor Co. stochk Hurst Co. stock 7% U.S. Treasury bonds 36,200 50,000 $113.937 $1.460 26,420 25,260 34.850 52.667 $I,160 Cr .350 Dr. 2,667 Cr $2.477 Cr Total 2012 (c) Jan Cash ,750 Interest Revenue 1.750 To record interest revenue for 6 months. (d) July Cash 1,750 Interest Revenue 1.750 To record interest revenue for 6 months. (e) Dec. 6 Investment in Available-for-Sale 26,420 Investment in Trading Securities Lawlor Co. 26.420 To recdassify Lawlor Co. stock from trading securities to available-for-sale securities. Market price was $26,100 at the date of reclassification. (f) Dec. 3 Unrealized Increase/Decrease in Value of Available-for-Sale Securities Market Adjustment-Available-for-Sale Securities Market Adjustment Trading Securities 220 967 To record the decrease in fair value of available-for-sale securities based on the following data. Cost Marke Market Adjustment Hurst Co. stock 7% U.S. Treasury bonds Lawlor Co. stock 34,850 35.350 51,200 26,200 $113.937 $I12.750 $ 500 Dr .467 Cr 220 Cr 52.667 26.420 Total $1.187 Cr.
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a 2011 Nov 1 Investment in Trading SecuritiesTreasury Bonds 51500 Interest Revenue 1167 Cash 52667 50000 1025 250 51500 50000 007 412 1167 b Dec 31 Un...View the full answer
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Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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