Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 15, Problem 2E
1.
To determine
Prepare the
2.
To determine
Prepare the year-end fair value
3.
To determine
Prepare the journal entry to record the sale of trading securities (costing $3,000) for $4,000 cash.
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Journ Co. purchased short-term investments in available-for-sale debt securities at a cost of $51,700 cash on November 25. At December 31, these securities had a fair value of $50,400. This is the first and only time the company has purchased such securities. 1. 2. & 3. Prepare the November 25 entry to record the purchase of debt securities, the December 31 year-end adjusting entry for the securities' portfolio, and the April 6 entry when Journ sells 11% of these securities ($5,687 cost) for $6,700 cash.
Record purchase of available-for-sale securities.
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General Journal
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Nov. 25
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Record the year-end adjustment to fair value, if any.
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General Journal
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Dec. 31
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Record sale of 11% of available-for-sale securities.
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Berkshire Co. purchases debt investments in trading securities at a cost of $130 on July 1. (This is its first and only purchase of trading securities.) On December 30, Berkshire received $1 of interest from its trading securities. At year-end December 31, the trading securities had a fair value of $140. a. Prepare the July 1 purchase entry of trading securities. b. Prepare the December 30 entry for receipt of cash interest. c. Prepare the December 31 year-end adjusting entry for the trading securities’ portfolio. d. Explain how each account in entry c is reported in financial statements. e. Prepare the January 3 entry when a portion of its trading securities (that had cost $33) is sold for $36.
Brooks Co. purchases debt investments as trading securities at a cost of $66,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $72,000. 1. Prepare the December 27 entry for the purchase of debt investments. 2. Prepare the December 31 year-end fair value adjusting entry for the trading securities’ portfolio. 3. Prepare the January 3 entry when Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash.
Chapter 15 Solutions
Principles of Financial Accounting.
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