Midwest Bank invests in trading securities. At the beginning of December 2007, the bank held no trading

Question:

Midwest Bank invests in trading securities. At the beginning of December 2007, the bank held no trading securities. During December of 2007, it entered into the following trading securities transactions:

Dec. 10 Purchased 500 shares of C Company common stock for $76 per share

Dec. 21 Purchased 800 shares of D Company common stock for $34 per share

At the end of December, the C Company common stock had a quoted market price of $79 per share and the D Company common stock had a quoted market price of $33 per share.

Required

1. Prepare journal entries to record the preceding information.

2. What is the unrealized holding gain or loss and where is it reported in the 2007 financial statements?

3. Show how the bank reports the trading securities on its December 31, 2007 balance sheet.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...