On December 21, 2017, Grouper Company provided you with the
following information regarding its equity investments.
|
December 31, 2017 |
|||||||
|---|---|---|---|---|---|---|---|
|
Investments (Trading) |
Cost |
Fair Value |
Unrealized Gain (Loss) |
||||
| Clemson Corp. stock | $ 18,900 | $ 17,900 | $( 1,000 | ) | |||
| Colorado Co. stock | 9,000 | 8,000 | ( 1,000 | ) | |||
| Buffaloes Co. stock | 18,900 | 19,540 | 640 | ||||
| Total of portfolio | $ 46,800 | $ 45,440 | ( 1,360 | ) | |||
| Previous fair value adjustment balance | 0 | ||||||
| Fair value adjustment—Cr. | $( 1,360 | ) | |||||
During 2018, Colorado Company stock was sold for $ 8,550. The fair
value of the stock on December 31, 2018, was Clemson Corp. stock—$
18,010; Buffaloes Co. stock—$ 19,430. None of the equity
investments result in significant influence.
| (a) | Prepare the adjusting journal entry needed on December 31, 2017. | |
|---|---|---|
| (b) | Prepare the journal entry to record the sale of the Colorado Co. stock during 2018. | |
| (c) | Prepare the adjusting journal entry needed on December 31, 2018. |
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
(a)December 31, 2017
Unrealized Holding Gain or Loss- Equity 1,360
Securities Fair Value Adjustment 1,360
(b) During 2018
Cash 8,550
Loss on Sale of Securities 450
Equity Investment 9,000
(c)
Fair Value Adjustment $1,000
Unrealized Holding Gain or Loss-Equity $1,000
| Investment | Amortized cost | Fair value | Unrealized Gain/ (Loss) |
| Clemson Corp. stock | 18900 | 18010 | -890 |
| Buffaloes Co. stock | 18900 | 19430 | 530 |
| Total of portfolio | 37800 | 37440 | -360 |
| Previous securities fair value adjustment balance—Cr. | 1360 | ||
| Securities fair value adjustment—Dr. | 1000 |
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