Trading Securities
Entries on December 21, 2010, Zurich Company provided you with the following
information regarding its trading securities. During 2011, Carolina Company
stock was sold for $9,500. The fair value of the stock on December 31, 2011,
was: Star gate Corp. stock—$19,300; Vector man Co. stock—$20,500.
(a) Prepare the
adjusting journal entry needed on December 31, 2010.
(b) Prepare the
journal entry to record the sale of the Carolina Company stock during 2011.
(c) Prepare the
adjusting journal entry needed on December 31, 2011.
December
31, 2010
Investments (Trading) Cost Fair Value Unrealized
Gain/(Loss)
Stragate Crops. Stock $20,000 $19,000 $(1,000)
Carolina Co. Stock 10,000 9,000 (1,000)
Vecctorman Co. Stock 20,000 20,600 600 .
Total of portfolio 50,000 48,600 (1,400)
Previous securities fair value,
Adjustment balance -0-
Securities fair value adjustment – Cr. $(1,400)
(a) December
31, 2010
Unrealized Holding Gain or
Loss—Income..................... 1,400
Securities Fair Value Adjustment (Trading)......... 1,400
(b) During
2011
Cash................................................................................... 9,500
Loss on Sale
Trading Securities................................................. 10,000
(c) December
31, 2011
|
Securities
|
Cost
|
Fair
Value
|
Unrealized
Gain
(Loss)
|
|
Stargate
Corp. stock
|
$20,000
|
$19,300
|
($ (700)
|
|
Vectorman
Co. stock
|
20,000
|
20,500
|
500
|
|
Total
of portfolio
|
$40,000
|
$39,800
|
(200)
|
|
Previous
securities fair value adjustment balance—Cr.
|
|
|
(1,400)
|
|
Securities
fair value adjustment—Dr.
|
|
|
($1,200)
|
Securities Fair Value Adjustment (Trading)
................... 1,200
Unrealized Holding Gain or Loss—
Income
...................................................... 1,200
