Question

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 31, 2021, was Clemson Corp. stock—$17,600; Buffaloes Co. stock—$19,080. None of the equity investments result in significant influence.

(a)		Prepare the adjusting journal entry needed on December 31, 2020.
(b)		Prepare the journal entry to record the sale of the Colorado Co. stock during 2021.
(c)		Prepare the adjusting journal entry needed on December 31, 2021.

(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.)

No.	Account Titles and Explanation	Debit	Credit
(a)	enter an account title to record transaction A	enter a debit amount	enter a credit amount
	enter an account title to record transaction A	enter a debit amount	enter a credit amount
(b)	enter an account title to record transaction B	enter a debit amount	enter a credit amount
	enter an account title to record transaction B	enter a debit amount	enter a credit amount
	enter an account title to record transaction B	enter a debit amount	enter a credit amount
(c)	enter an account title to record transaction C	enter a debit amount	enter a credit amount
	enter an account title to record transaction C	enter a debit amount	enter a credit amount

Answer 1

Journal Entry:

Date	Account Name	Debit	Credit
(A)	Unrealized Holding Gain or Loss -Equity	$1,520
	To Fair Value Adjustment		$ 1,520
( B)	Cash	$ 9,080
	Loss on sale of investment	5,20
	To Equity Investment		$9,600
( C)	Fair Value Adjustment	$1000
	To Unrealized Holding Gain or Loss- Equity		$1000

Working:

Investment	Cost	Fair Value	Unadjusted Gain (Loss)
Clemson Corp. stock	$ 18,600	17,600	- $1000
Buffaloes Co. stock	$ 18,600	19,080	480
Total Value			-520
Previous Fair Value Adjustment			1520
Fair value adjustment - credit			$ 1000