Question

Korman Company has the following securities in its portfolio of equity securities on December 31, 2018:

Cost Fair Value

5,000 shares of Thomas Corp., Common $151,000 $139,000

10,000 shares of Gant, Common 184,000 190,000

$335,000 $329,000

All of the securities had been purchased in 2018. In 2019, Korman completed the following securities transactions:

March 1 Sold 5,000 shares of Thomas Corp., Common @ $32 less fees of $1,500.

April 1 Bought 600 shares of Werth Stores, Common @ $45 plus fees of $550.

The Korman Company portfolio of equity securities appeared as follows on December 31, 2019:

Cost Fair Value

10,000 shares of Gant, Common $184,000 $195,500

600 shares of Werth Stores, Common 27,550 25,500

$211,550 $221,000

Instructions

Prepare the general journal entries for Korman Company for:

(a) the 2018 adjusting entry.

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

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

(d) the 2019 adjusting entry.

Answer 1

No.	Date	Account titles and explanation	Debit	Credit
A	12-31-18	Unrealized Holding Gain or Loss—Income	6000
		Securities Fair Value Adjustment (Trading) ($335,000 – $329,000)		6000
B	3-1-19	Cash [(5,000 * $32) – $1,500]	158500
		Loss on Sale of Securities	1500
		Trading Securities		160000
C	4-1-19	Trading Securities	27550
		Cash [(600 * $45) + $550]		275500
D	12-31-19	Securities Fair Value Adjustment (Trading)	15450
		Unrealized Holding Gain or Loss—Income (221000-211550)+6000		15450