Question
Armadillo Enterprises acquired the following equity investments at the beginning of year 1 as trading investments. Description Finestra Company BVD Company Number of shares 15,000
Armadillo Enterprises acquired the following equity investments at the beginning of year 1 as trading investments.
| Description | Finestra Company | BVD Company |
| Number of shares | 15,000 | 20,000 |
| Market price per share | X $25 | X$18 |
| Total price | $387,500 | $360,000 |
Market values at the end of Years 1 &2 are presented below:
| Market/Fair Value | Finestra Company | BVD Company |
| End of year 1 | $19 | $22 |
| End of year 2 | $23 | $28 |
REQUIREMENTS: (45 points)
Prepare the journal entry to record the acquisition of the investments.
Prepare the adjusting journal entry required at the end of year 1.
Armadillo Enterprises sells 15,000 shares of BVD Company for $16 at the beginning of year 2. Prepare the journal entry to record the sale.
Prepare the adjusting journal entry required at the end of year 2.
Assume that Armadillo Enterprises now holds these investments as available-for-sale.
Prepare the journal entry to record the acquisition of the investments.
Prepare the adjusting journal entry required at the end of year 1.
Armadillo Enterprises sells 15,000 shares of BVD Company for $16 at the beginning of year 2. Prepare the journal entry to record the sale.
Prepare the journal entry to record the sale of all the remaining shares in Armadillos portfolio (both Finestra and BVD Company) for $496,500 at the end of year 2.
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