Question

Torrez Company has the following securities in its portfolio of equity securities on December 31, 2018: Cost Fair Value 5,000 shares of Thompson Corp., Common $151,000 $155,000 10,000 shares of Gaye, Common 184,000 190,000 $335,000 $345,000 All of the securities had been purchased in 2018. In 2019, Torrez completed the following securities transactions: March 1 Sold 5,000 shares of Thompson Corp., Common @ $32 less fees of $1,500. April 1 Bought 600 shares of Welch Stores, Common @ $45 plus fees of $550. The Torrez Company portfolio of equity securities appeared as follows on December 31, 2019: Cost Fair Value 10,000 shares of Gaye, Common $184,000 $195,500 600 shares of Welch Stores, Common 27,550 25,500 $211,550 $221,000.

Prepare the general journal entries for Torrez Company for:

(a) the 2018 adjusting entry.

(b) the sale of the Thompson Corp. stock.

(c) the purchase of the Welch Stores' stock.

(d) the 2019 adjusting entry.

Answer 1

No.	Accounts	debit	credit
a	securities fair value adjustment (trading)	10000
	unrealised holding gain or loss - income		10000
	335000-345000
b	cash	158500
	(5000*32)-1500
	gain on sale of securities		7500
	trading securities		151000
c	trading securities	27550
	cash		27550
	(600*45)+550
d	securities fair value adjustment (trading)	9450
	unrealised holding gain or loss - income		9450
	221000-211550