Question
At December 31, 2014 , Charter Holding Co. owned the following investments in capital stock of publicly traded companies (classified as available-for-sale securities): Cost Current
At December 31, 2014, Charter Holding Co. owned the following investments in capital stock of publicly traded companies (classified as available-for-sale securities):
Cost | Current Market Value | ||||||
Limited Brands, Inc. (5,000 shares: cost, $40 per share; market value, $44) | $ | 200,000 | $ | 220,000 | |||
The Gap, Inc. (4,000 shares: cost, $40 per share; market value, $36) | 160,000 | 144,000 | |||||
$ | 360,000 | $ | 364,000 | ||||
In 2015, Charter engaged in the following two transactions: |
Apr. | 10 | Sold 1,000 shares of its investment in Limited Brands, Inc., at a price of $45 per share, less a brokerage commission of $100. | |
Aug. | 7 | Sold 2,000 shares of its investment in The Gap, Inc., at a price of $35 per share, less a brokerage commission of $150. |
At December 31, 2015, the market values of these stocks were: Limited Brands, Inc., $42 per share; and The Gap, Inc., $37 per share. |
PLEASE HELP ME, I'M STUCK! Instructions |
a-1. | Calculate the amount of marketable securities in the balance sheet at December 31, 2014. |
a-2. | Calculate the amount of unrealized holding gain (or loss) in the balance sheet at December 31, 2014. |
b. | Prepare journal entries to record the transactions on April 10 and August 7. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.) |
c-1. | Prior to making a mark-to-market adjustment at the end of 2015, determine the unadjusted balance in the Marketable Securities control account. (Assume that no unrealized gains or losses have been recognized since last year.) |
c-2 | Prior to making a mark-to-market adjustment at the end of 2015, determine the Unrealized Holding Gain (or Loss) on Investments. (Assume that no unrealized gains or losses have been recognized since last year.) |
d. | Prepare a schedule showing the cost and market values of securities owned at the end of 2015. |
e. | Prepare the fair value adjusting entry required at December 31, 2015. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.) |
f-1. | Calculate the amount of marketable securities in the balance sheet at December 31, 2015. |
f-2. | Calculate the amount of unrealized holding gain (or loss) in the balance sheet at December 31, 2015. |
g. | Illustrate the presentation of the net realized gains (or losses) in the 2015 income statement. Assume a multiple-step income statement and show the caption identifying the section in which this amount would appear. |
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