Question

On December 21, 2017, Stellar Company provided you with the following information regarding its equity investments....

On December 21, 2017, Stellar 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 $21,200 $20,100 $(1,100 )
Colorado Co. stock 9,300 8,200 (1,100 )
Buffaloes Co. stock 21,200 21,740 540
Total of portfolio $51,700 $50,040 (1,660 )
Previous fair value adjustment balance 0
Fair value adjustment—Cr. $(1,660 )


During 2018, Colorado Company stock was sold for $8,750. The fair value of the stock on December 31, 2018, was Clemson Corp. stock—$20,210; Buffaloes Co. stock—$21,650. 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.

Homework Answers

Answer #1

(a) unrealized loss on investment a/c Dr. $1100

To investment a/c $1100

( being difference in the cost and fair value of investment is recorded)

Unrealized loss on investment a/c Dr. $1100

To investment a/c .$1100

(Being difference in the cost and fair value is recorded)

Investment a/c Dr.$540

To unrealized gain on investment a/c $540

(Being differences in cost and fair value is recorded)

(b) in case of selling of investment the investment is valued at cost or NRV whichever is lower. In this case the investment will be valued at $8200 (fair value)

Cash A/c Dr. $8750

To investment A/c $8200

To profit on sale of investment A/c $550

(Being sale of investment is recorded )

(C) Investment A/c Dr. $110

To unrealized gain on investment A/c $110

($20210 - $20100 = $110)

Unrealized loss on investment A/c Dr. $90

To investment A/c $90

($21650 - $21740 = $90)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On December 21, 2017, Martinez Company provided you with the following information regarding its equity investments....
On December 21, 2017, Martinez 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 $20,800 $19,900 $(900 ) Colorado Co. stock 9,300 8,300 (1,000 ) Buffaloes Co. stock 20,800 21,420 620 Total of portfolio $50,900 $49,620 (1,280 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,280 ) During 2018, Colorado Company stock was sold for $8,790. The fair value of the stock...
On December 21, 2020, Sarasota Company provided you with the following information regarding its equity investments....
On December 21, 2020, Sarasota Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $18,600 $17,500 $(1,100 ) Colorado Co. stock 9,600 8,600 (1,000 ) Buffaloes Co. stock 18,600 19,180 580 Total of portfolio $46,800 $45,280 (1,520 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,520 ) During 2021, Colorado Co. stock was sold for $9,080. The fair value of the stock...
On December 21, 2020, Marin Company provided you with the following information regarding its equity investments....
On December 21, 2020, Marin Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $18,600 $17,500 $(1,100 ) Colorado Co. stock 9,600 8,600 (1,000 ) Buffaloes Co. stock 18,600 19,180 580 Total of portfolio $46,800 $45,280 (1,520 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,520 ) During 2021, Colorado Co. stock was sold for $9,080. The fair value of the stock...
On December 21, 2020, Headland Company provided you with the following information regarding its equity investments....
On December 21, 2020, Headland Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $19,900 $19,000 $(900 ) Colorado Co. stock 10,100 9,100 (1,000 ) Buffaloes Co. stock 19,900 20,460 560 Total of portfolio $49,900 $48,560 (1,340 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,340 ) During 2021, Colorado Co. stock was sold for $9,590. The fair value of the stock...
E17.7 (LO 2) (Equity Securities Entries) On December 21, 2020, Bucky Katt Company provided you with...
E17.7 (LO 2) (Equity Securities Entries) On December 21, 2020, Bucky Katt Company provided you with the following information regarding its equity investments. December 31, 2020 Investments  Cost  Fair Value Unrealized Gain (Loss) Clemson Corp. stock $20,000 $19,000 $(1,000) Colorado Co. stock 10,000 9,000 (1,000) Buffaloes Co. stock  20,000  20,600   600  Total of portfolio $50,000 $48,600 (1,400) Previous fair value adjustment balance    –0–  Fair value adjustment—Cr. $(1,400) During 2021, Colorado Co. stock was sold for $9,400. The fair value of...
On December 31, 2019, Criterion Company provided the following information related to its portfolio of equity...
On December 31, 2019, Criterion Company provided the following information related to its portfolio of equity investments.  The company holds a less than 20% interest in all equity investments. The set of transactions are all related, your account balances should be carried forward and used for subsequent entries. Investments Cost Fair Value Clemson Corp. stock $20,000 $19,000 Rocky Mountain Corp stock 10,000 9,000 Buffalo Bills Corp stock 20,000 20,600 Total of portfolio $50,000 $48,600 Previous fair value adjustment balance (December 31,...
On December 31, 20Y1, Smith, Inc. provided you with the following information regarding its securities: Investments...
On December 31, 20Y1, Smith, Inc. provided you with the following information regarding its securities: Investments Cost Fair value Unrealized gain (loss) Aloe Corp. Stock $ 50,000 $62,000         $ 12,000 Fuller Inc Stock 80,000 83,000               3,000 Holmes Corp Stock 100,000 91,000             (9,000) $230,000 236,000              6,000 Previous securities FV adjustment balance                    - Securities FV adjustment (DR)              6,000 During 20Y2, Harold acquired TD, Inc. stock for $40,000 in cash. Also during 20Y2, Harold sold the Holmes Corp. stock for $90,000. At December...
On December 31, 2019, Sarasota Corp. provided you with the following pre-adjustment information regarding its portfolio...
On December 31, 2019, Sarasota Corp. provided you with the following pre-adjustment information regarding its portfolio of investments held for short-term profit-taking: December 31, 2019 Investments Carrying Amount Fair Value Moonstar Corp. shares $21,000 $19,800 Bilby Corp. shares 10,500 9,400 Radius Ltd. shares 20,800 21,400 Total portfolio $52,300 $50,600 During 2020, the Bilby Corp. shares were sold for $10,000. The fair values of the securities on December 31, 2020, were as follows: Moonstar Corp. shares $20,700 and Radius Ltd. shares...
Information regarding Carperk Company's individual investments in securities during its calendar-year 2017, along with the December...
Information regarding Carperk Company's individual investments in securities during its calendar-year 2017, along with the December 31, 2017, fair values, follows. Investment in Brava Company bonds: $314,200 cost, $341,535 fair value. Carperk intends to hold these bonds until they mature in 2022. Investment in Baybridge common stock: 29,500 shares; $249,789 cost; $271,521 fair value. Carperk owns 32% of Baybridge's voting stock and has a significant influence over Baybridge. Investment in Buffa common stock: 12,000 shares; $128,822 cost; $138,870 fair value....
Korman Company has the following securities in its portfolio of equity securities on December 31, 2018:...
Korman Company has the following securities in its portfolio of equity securities on December 31, 2018: Cost Fair Value 5,000 shares of Thomas Corp., Common $149,000 $138,000 10,000 shares of Gant, Common 180,000 187,000 $329,000 $325,000 All of the securities had been purchased in 2018. In 2019, Korman completed the following securities transactions: March 1 Sold 5,000 shares of Thomas Corp., Common @ $30.80 less fees of $1,500. April 1 Bought 580 shares of Werth Stores, Common @ $43 plus...