Question

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 on December 31, 2021, was Clemson Corp. stock—$19,100; Buffaloes Co. stock—$20,360. 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