Question

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:

1	Name	Number of Shares	Total Cost	Total Fair Value
2	Griffin Inc.	1,410.00	$28,200.00	$31,020.00
3	Luck Company	1,210.00	30,250.00	27,830.00
4	Wilson Company	840.00	29,400.00	27,720.00
5	Total		$87,850.00	$86,570.00

On May 10, Year 2, Gruden Bancorp Inc. purchased 1,060 shares of Carroll Inc. at $26 per share plus a $135 brokerage commission.

Required:

A.	Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31, Year 1.*
B.	Provide the journal entry to record the May 10, Year 2, purchase of Carroll Inc. stock.*
	*Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS

Gruden Bancorp Inc.

General Ledger

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
121	Allowance for Doubtful Accounts
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
161	Investments-Carroll Inc Stock
165	Valuation Allowance for Trading Investments
166	Valuation Allowance for Available-for-Sale Investments
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
231	Interest Payable
241	Salaries Payable
251	Sales Tax Payable

	EQUITY
311	Common Stock
312	Paid-In Capital in Excess of Par-Common Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Treasury Stock
332	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
350	Unrealized Gain (Loss) on Available-for-Sale Investments
351	Cash Dividends
352	Stock Dividends
390	Income Summary

	REVENUE
410	Sales
411	Interest Revenue
412	Dividend Revenue
421	Income of Carroll Inc
431	Gain on Sale of Investments
641	Unrealized Gain (Loss) on Trading Investments

	EXPENSES
511	Cost of Merchandise Sold
512	Bad Debt Expense
515	Credit Card Expense
516	Cash Short and Over
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
534	Selling Expenses
535	Rent Expense
536	Insurance Expense
537	Office Supplies Expense
538	Store Supplies Expense
561	Depreciation Expense-Store Equipment
562	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense
721	Loss of Carroll Inc
731	Loss on Sale of Investments

A. Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

B. Provide the journal entry to record the May 10, Year 2, purchase of Carroll Inc. stock. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

Answer 1