Question

The Janjua Company had the following account balances at 1/1/18: Common Stock $90,000 Treasury Stock (at...

The Janjua Company had the following account balances at 1/1/18:

Common Stock

$90,000

Treasury Stock (at cost)

$12,000

Paid-in-Capital in Excess of Par

$60,000

Investments in Trading Debt Securities

$30,000

FVA (Trading)

$2,000 debit

Retained Earnings

$14,000

There were no sales or purchases of Common Stock or Investments during 2018. Prior to any adjusting journal entries related to the Investments, 2018 Net Income was $8,600. No other transactions affecting Retained Earnings occurred. Fair Value of the Investments at 12/31/18 was $28,500.

Required:

Prepare the 12/31/18 journal entry to adjust the investment to fair value.

Prepare the complete 12/31/18 Equity section of the balance sheet.

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Answer #1
A. Adjusting Journal Entry
Date Account Titles Debit Credit
31-Dec Fair value adjustment ( AFS) $1,500
Investment in Trading Debt securities
($30000-$28500)		 $1,500
B. Balance Sheet (Partial)
As on December 31, 2018
Stockholders' Equity: $
Common stock $90,000
Paid-in capital in excess of par $60,000
Retained earnings (14000+$8600) 22,600
Accumulated Other Comprehensive Income
Fair Value Adjustment ( AFS) (2000-1500) 500 $23,100
Treasury stock -$12,000
Total Stockholders' Equity $161,100
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