Fair Value Journal Entries, Trading Investments Gruden Bancorp
Inc. purchased a portfolio of trading securities during Year 1. The
cost and fair value of this portfolio on December 31, Year 1, was
as follows: Name Number of Shares Total Cost Total Fair Value
Griffin Inc. 1,150 $15,410 $14,490 Luck Company 750 24,600 22,880
Wilson Company 350 10,500 10,710 Total $50,510 $48,080 On May 10,
Year 2, Gruden Bancorp Inc. purchased 500 shares of Carroll Inc.,
at $30 per share plus a $140 brokerage commission. Provide the
journal entries to record the following: a. The adjustment of the
trading security portfolio to fair value on December 31, Year 1.
Year 1 Dec. 31 Unrealized Gain (Loss) on Trading Investments
Valuation Allowance for Trading Investments Feedback a. The gain or
loss is the difference between the portfolio cost and its fair
value. The offset account for the gain or loss entry is the
valuation allowance account. b. The May 10, Year 2, purchase of
Carroll Inc., stock. Year 2 May 10 Investments-Carroll Inc.
Cash