(a). Angel Company purchases a portfolio of passive equity investments on January 1, 2021 for $291,650. On April 15, 2021 Angel s sold stocks from its portfolio. Those stocks had a cost basis of $78,125 and were sold for $82,400. On June 20, 2021, the firm purchased additional passive equity securities for $79,760. The firm received cash dividends on October 30, 2021 of $20,845. the fair value of the portfolio was $303,800 on December 30, 2021.

provide the missing Journal information in the table below.

Answer:

Account Name Entry Amount DR/CR/NA

1/1/21 Equity Investments $

4/15/21 Gain/Loss on Sale $

10/31/21 Dividend Revenue $

12/31/21 Fair Value Adjustment $

(b). At the end of 2020, Hornets Company did not own any debt or equity investments, On January 1st, 2021. Hornets Company purchased newly issued 4-year, 6% annual coupon General Electric bonds as an available for sale investment. The purchase price was 103 for each $1,000 bond. Hornets acquired 400 of these bonds. The fair value of each bond was 102.5 on December 31, 2021. Hornets company sold 220 of the bonds at 101.5 on March 1, 2022.

Use the following amortization table for each bond to answer the question that follow.

January 1, 2021 ---- ---- ---- 1,030.00

December 31, 2021 60.00 53.06 -6.94 1,023.06

December 31,2022 60.00 52.70 -7.30 1,015.75

Provide the fair value adjustment Journal entry information for December 31st, 2021 and sale on March 1st 2022 and the table below.

Answer:

Account Name Entry Amount DR/CR/NA

12/31/21 fair value adjustment $

UHGL - Income $

3/1/2022 Cash $

Debt Investment $

Fair Value Adjustment $

Gain or Loss on Sale $

Interest Revenue $