While reviewing the March 31, 2019, balance sheet of Business Solutions, Santana Rey notes that the business

Question:

While reviewing the March 31, 2019, balance sheet of Business Solutions, Santana Rey notes that the business has built a large cash balance of $68,057. Its most recent bank money market statement shows that the funds are earning an annualized return of 0.75%. S. Rey decides to make several investments with the desire to earn a higher return on the idle cash balance. Accordingly, in April 2019, Business Solutions makes the following investments in trading securities.

Apr. 16 Purchases bonds of Johnson & Johnson for $10,000.

Apr. 30 Purchases notes of Starbucks for $4,400.

On June 30, 2019, the fair value of the Johnson & Johnson bonds is $12,000 and the Starbucks notes is $3,800.

Required

1. Prepare journal entries to record the April purchases of trading securities by Business Solutions.

2. On June 30, 2019, prepare the adjusting entry to record any necessary fair value adjustment to its portfolio of trading securities.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...

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