Question
46. Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations: Name Number of Shares Cost Dust Devil, Inc. 1,880
46.
Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations:
Name | Number of Shares | Cost | |||||||||||||
Dust Devil, Inc. | 1,880 | $80,840 | |||||||||||||
Gale Co. | 800 | 64,000 | |||||||||||||
Whirlwind Co. | 2,850 | 111,150 | |||||||||||||
Total | $255,990 The market price per share for the available-for-sale security portfolio on December 31, Year 1, was as follows:
Required:
|
A. Provide the journal entry to adjust the available-for-sale 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 | Adjusting Entries | |||||||
2 | ||||||||
3 |
B. Describe the income statement impact from the December 31, Year 1, journal entry.
There --------- income statement impact from the December 31, Year 1, adjusting entry. Unrealized Gain (Loss) on Available-for-Sale Investments is reported in the -------------- .
On December 31, Year 1, Unrealized Gain or Loss on Available-for-Sale Investments would be disclosed as follows (if a loss, use a minus sign): ---------------
Unrealized gain (loss) on available-for-sale investments:
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