Southern Bank invests in trading securities and prepares quarterly financial statements. At the beginning of the fourth
Question:
Southern Bank invests in trading securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2007, the bank held as trading securities 200 shares of Company E common stock that had originally cost $5,500. At that time, these securities had a fair value of $5,200. During the fourth quarter, the bank engaged in the following trading securities transactions:
Oct. 26 Purchased 300 shares of Company F common stock for $35 per share
Nov. 26 Sold 200 shares of Company E common stock for $25 per share
Dec. 10 Purchased 400 shares of Company G common stock for $41 per share
On December 31, 2007 the quoted market prices of the shares were as follows: E, $52 per share; F, $38 per share; and G, $40 per share.
Required
1. Prepare journal entries to record the preceding information for the fourth quarter.
2. Show what the bank reports on its fourth quarter 2007 income statement for these trading securities.
3. Show how the bank reports these trading securities on its balance sheet at the end of the fourth quarter of 2007.
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... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones