Part A (16 marks) Presented below are three independent situations. 1. On December 15, 2020, Harmony...

 

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Part A (16 marks) Presented below are three independent situations. 1. On December 15, 2020, Harmony sold 300 shares of Bob Company stock for $125 per share, less a $450 brokerage fee. Before the sale, Harmony held 600 shares at a total cost of $72,750. On December 31, the fair value of the Bob Company stock was $124 per share. The stock was classified as trading securities. 2. Garrett Cosmetics acquired 10% of the 200,000 shares of common stock of Clyde Fashion at a total cost of $11 per share on March 18, 2020. On June 30, Clyde declared and paid a $60,000 dividend. On December 31, Clyde reported net income of $110,000 for the year. At December 31, the market price of Clyde Fashion was $15 per share. The stock is classified as available-for-sale. 3. Upton, Inc., obtained significant influence over Focus Corporation by buying 25% of Focus 40,000 outstanding shares of common stock at a total cost of $7 per share on January 1, 2020. On June 15, Focus declared and paid a cash dividend of $30,000. On December 31, Focus reported a net income of $80,000 for the year. 4. At December 31, 2020, the available-for-sale securities for Allison, Inc. were as follows. Fair Value $24,000 13,000 18,000 $55.000 Required: 1) 2) 3) 5) Security X Y Z Cost $27,500 12,500 23,000 $63.000 Prepare the journal entries (without explanation) for 2020 for Harmony Company. Prepare the journal entries (without explanation) for 2020 for Garrett Cosmetics. Prepare the journal entries (without explanation) for 2020 for Upton, Inc. Prepare the adjusting journal entry (without explanation) at Dec. 31, 2020 for Allison, Inc.. Show Allison, Inc.'s partial balance sheet (or Statement of Financial Positions) and presentation at December 31, 2020, after the adjusting journal entry. The securities are considered to be a long-term investment. Part B (4 marks) 1) Under what circumstance does unrealised gain or loss arise? 2) State how unrealized gain or loss are handled for trading securities, available-for-sales securities and held-to-maturities securities. Part A (16 marks) Presented below are three independent situations. 1. On December 15, 2020, Harmony sold 300 shares of Bob Company stock for $125 per share, less a $450 brokerage fee. Before the sale, Harmony held 600 shares at a total cost of $72,750. On December 31, the fair value of the Bob Company stock was $124 per share. The stock was classified as trading securities. 2. Garrett Cosmetics acquired 10% of the 200,000 shares of common stock of Clyde Fashion at a total cost of $11 per share on March 18, 2020. On June 30, Clyde declared and paid a $60,000 dividend. On December 31, Clyde reported net income of $110,000 for the year. At December 31, the market price of Clyde Fashion was $15 per share. The stock is classified as available-for-sale. 3. Upton, Inc., obtained significant influence over Focus Corporation by buying 25% of Focus 40,000 outstanding shares of common stock at a total cost of $7 per share on January 1, 2020. On June 15, Focus declared and paid a cash dividend of $30,000. On December 31, Focus reported a net income of $80,000 for the year. 4. At December 31, 2020, the available-for-sale securities for Allison, Inc. were as follows. Fair Value $24,000 13,000 18,000 $55.000 Required: 1) 2) 3) 5) Security X Y Z Cost $27,500 12,500 23,000 $63.000 Prepare the journal entries (without explanation) for 2020 for Harmony Company. Prepare the journal entries (without explanation) for 2020 for Garrett Cosmetics. Prepare the journal entries (without explanation) for 2020 for Upton, Inc. Prepare the adjusting journal entry (without explanation) at Dec. 31, 2020 for Allison, Inc.. Show Allison, Inc.'s partial balance sheet (or Statement of Financial Positions) and presentation at December 31, 2020, after the adjusting journal entry. The securities are considered to be a long-term investment. Part B (4 marks) 1) Under what circumstance does unrealised gain or loss arise? 2) State how unrealized gain or loss are handled for trading securities, available-for-sales securities and held-to-maturities securities.