Question

Fair Value Journal Entries, Trading Investments

Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair value of this portfolio on December 31, Year 1, was as follows:

Name		Number of Shares		Total Cost		Total Fair Value
Griffin Inc.		1,600		$40,000		$44,800
Luck Company		1,250		37,500		33,750
Wilson Company		1,000		40,000		37,000
	Total			$117,500		$115,550

On May 10, Year 2, Gruden Bancorp Inc. purchased 1,200 shares of Carroll Inc. at $29 per share plus a $100 brokerage commission.

Provide the journal entries to record the following:

a. The adjustment of the trading security portfolio to fair value on December 31, Year 1.

Year 1 Dec. 31

b. The May 10, Year 2, purchase of Carroll Inc. stock.

Year 2 May 10

Answer 1