Question

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 fees of $500. The Korman Company portfolio of equity securities appeared as follows on December 31, 2019: Cost Fair Value 10,000 shares of Gant, Common $180,000 $190,000 580 shares of Werth Stores, Common 25,440 23,540 $205,440 $213,540

Prepare the general journal entry for Korman Company for the 2018 adjusting entry.

Prepare the general journal entry for Korman Company for the sale of the Thomas Corp. stock

Prepare the general journal entry for Korman Company for the purchase of the Werth Stores' stock.

Prepare the general journal entry for Korman Company for the 2019 adjusting entry.

Answer 1

Journal Entries ;-

Date	Particulars	Debit($)	Credit($)
a) 2018	Unrealized Holding gain or loss A/c	4000
	Securities fair value adjustment A/c ($329000-$325000)		4000
b) 1 March	Cash A/c ((5000*$30.80)-$1500)	152500
	Equity Investment A/c		149000
	Profit on Sale of Equity Investment A/c($152500-$149000)		3500
c) 1 April	Equity Investment A/c	25440
	Cash A/c ((580*$43)+$500)		25440
d) 2019	Securities fair Value adjustment A/c	12100
	Unrealized holding gain or loss A/c		12100
	($4000+($213540-($180000+$25440))) =($4000+$8100)=$12100