Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 13, Problem 4APE
To determine
Trading securities:
These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.
Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The year-end valuation of trading securities transaction
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Valuing Trading Securities at Fair Value
On January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $54,800, and the fair value was $55,800.
Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments.
Instructions
On January 1, Valuation Allowance for Trading Investments had a zero balance. On December
31, the cost of the trading securities portfolio was $380,400, and the fair value was $346,500.
Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading
investments. Refer to the Chart of Accounts for exact wording of account titles.
On January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $379,600, and the fair value was $358,900.
Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments. Refer to the Chart of Accounts for exact wording of account titles.
Chapter 13 Solutions
Financial & Managerial Accounting
Ch. 13 - Prob. 1DQCh. 13 - What causes a gain or loss on the sale of a bond...Ch. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - What are the factors contributing to the trend...Ch. 13 - Prob. 10DQ
Ch. 13 - Prob. 1APECh. 13 - Bond investment transactions Journalize the...Ch. 13 - Prob. 2APECh. 13 - Stock investment transactions On September 12,...Ch. 13 - Prob. 3APECh. 13 - Prob. 3BPECh. 13 - Prob. 4APECh. 13 - Prob. 4BPECh. 13 - Prob. 5APECh. 13 - Prob. 5BPECh. 13 - Prob. 6APECh. 13 - Prob. 6BPECh. 13 - Prob. 1EXCh. 13 - Prob. 2EXCh. 13 - Prob. 3EXCh. 13 - Prob. 4EXCh. 13 - Prob. 5EXCh. 13 - Entries for investment in stock, receipt of...Ch. 13 - Prob. 7EXCh. 13 - Prob. 8EXCh. 13 - Entries for stock investments, dividends, and sale...Ch. 13 - Prob. 10EXCh. 13 - Prob. 11EXCh. 13 - Prob. 12EXCh. 13 - Prob. 13EXCh. 13 - Prob. 14EXCh. 13 - Prob. 15EXCh. 13 - Prob. 16EXCh. 13 - Fair value journal entries, trading investments...Ch. 13 - Prob. 18EXCh. 13 - Prob. 19EXCh. 13 - Prob. 20EXCh. 13 - Prob. 21EXCh. 13 - Prob. 22EXCh. 13 - Prob. 23EXCh. 13 - Prob. 24EXCh. 13 - Prob. 25EXCh. 13 - Prob. 26EXCh. 13 - Prob. 27EXCh. 13 - Prob. 28EXCh. 13 - Prob. 29EXCh. 13 - Debt investment transactions, available-for-sale...Ch. 13 - Prob. 2APRCh. 13 - Stock investment transactions, equity method and...Ch. 13 - Prob. 4APRCh. 13 - Prob. 1BPRCh. 13 - Prob. 2BPRCh. 13 - Stock investment transactions, equity method and...Ch. 13 - Prob. 4BPRCh. 13 - Selected transactions completed by Equinox...Ch. 13 - Benefits of fair value On July 16, 1998, Wyatt...Ch. 13 - Prob. 2CPCh. 13 - Prob. 3CPCh. 13 - Prob. 4CP
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- On January 1, Valuation Allowance for Trading The balance sheet caption used to report temporary or long-term investments in stocks or bonds held as either trading, available-for-sale, held-to-maturity or equity method securities. Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $66,800, and the fair value was $68,000. Prepare the December 31 adjusting journal entry to record the Changes in the fair value of equity or debt securities for a period.unrealized gain or loss on trading investments. Dec. 31arrow_forwardOn December 31, the cost of trading securities portfolio was $64,200, and the fair value was $67,000. The adjusting entry to record the unrealized gain or loss on trading investments would included a : Group of answer choices debit Unrealized Loss on Trading Investments debit Unrealized Gain on Trading Investments credit Unrealized Loss on Trading Investments credit Unrealized Gain on Trading Investmentsarrow_forwardOn January 1, the valuation allowance for trading investments account has a zero balance. On December 31, the cost of trading securities portfolio was $64,200, and the fair value was $67,000. Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments.arrow_forward
- Valuing Trading Securities at Fair ValueOn January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $47,000, and the fair value was $48,300.Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments.Dec. 31arrow_forwardaluing Trading Securities at Fair Value On January 1, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $59,000, and the fair value was $60,400. Prepare the December 31 adjusting journal entry to record the unrealized gain or loss on trading investments. Dec. 31arrow_forwardFair value adjustment for trading investments During the year ended December 31, 20Y3, trading securities were purchased for $346,000. On December 31, 20Y3, the securities had a fair value of $309,000. Journalize the December 31, 20Y3, adjusting entry to record the unrealized gain or loss on trading investments purchased in 20Y3. If an amount box does not require an entry, leave it blank. 20Y3 Dec. 31arrow_forward
- Trading Securities at Fair Value On January 1, 20Y9, Valuation Allowance for Trading Investments had a zero balance. On December 31, the cost of the trading securities portfolio was $62,600, and the fair value was $63,500. Journalize the December 31, 20Y9, adjusting entry to record the unrealized gain or loss on trading investments. If an amount box does not require an entry, leave it blank. Dec. 31arrow_forwardAt December 31, 2017, the trading securities for Storrer, Inc. are as follows. Security A Cost Tk. 17,500 12,500 23,000 Tk. 53,000 Fair Value Tk.16,000 14,000 21,000 Tk. 51,000 B Instructions (a) Prepare the adjusting entry at December 31, 2017, to report the securities at fair value. (b) Show the balance sheet and income statement presentation at December 31, 2017, after adjustment to fair value.arrow_forwardOn January 1, 20Y3, Valuation Allowance for Trading Investments had a zero balance. On December 31, 20Y3, the cost of the trading securities portfolio was $346,000, and the fair value was $309,000. Required: Journalize the December 31, 20Y3, adjusting entry to record the unrealized gain or loss on trading investments. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 120 Accounts Receivable 121 Allowance for Doubtful Accounts 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 161 Trading Investments 162 Available-for-Sale Investments 165 Valuation Allowance for Trading Investments 166 Valuation…arrow_forward
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