CHAPTER 7 ACCOUNTING -3RD ATTEMPT TO GET AN ANSWER TO THIS QUESTION.
At December 31, year 1, Charter Holding Co. owned the following investments in capital stock of publicly traded companies (classified as available-for-sale securities). L Brands, Inc. (5,000 shares: cost, $44 per share; market value, $52) The Gap, Inc. (4,000 shares: cost, $42 per share; market value, $39) Cost $ 220,000 168,000 $ 388,000 Current Market Value $ 260,000 156,000 416,000 In year 2, Charter engaged in the following two transactions. Apr. 10 Sold 1,000 shares of its investment in L Brands, Inc., at a price of $58 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 $37 per share, less a brokerage commission of $150. At December 31, year 2, the market values of these stocks were: L Brands, Inc., $67 per share; and The Gap, Inc., $37 per share. Required: a-1. Calculate the amount of marketable securities reported in the asset section of Charter's balance sheet at December 31, year 1. a-2. Calculate the amount of unrealized gain or loss reported in the stockholders' equity section of Charter's balance sheet at December 31, year 1. b. Prepare journal entries to record the transactions on April 10 and August 7. C-1. Prior to making a mark-to-market adjustment at the end of year 2, 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 year 2, determine the Unrealized Holding Gain (or Loss) on Investments account. (Assume that no unrealized gains or losses have been recognized since last year.) d. Prepare a schedule showing the cost and the market values securities owned at the end of year 2. e. Prepare the fair value adjusting entry required at December 31, year 2. f-1. Calculate the amount of marketable securities in the balance sheet at December 31, year 2. f-2. Calculate the amount of unrealized holding gain (or loss) in the balance sheet at December 31, year 2. g. Illustrate the presentation of the net realized gains (or losses) in the year 2 income statement. Assume a multiple-step income statement and show the caption identifying the section in which this amount would appear. Req A1 Req A2 ReqB Reg C1 Req C2 Reg D Reg E Req F1 Reg F2 Reg G Prepare the fair value adjusting entry required at December 31, year 2. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.) No Transaction Debit Credit 1 1 60,000 > General Journal Marketable securities Unrealized holding gain on investments Loss on sale of investments Marketable securities 60,000 X x 4,000 X 4,000 X Req A1 Req A2 Req B Req C1 Reg C2 Reg D Reg E Reg F1 Reg F2 Req G Calculate the amount of unrealized holding gain or loss) in the balance sheet at December 31, year 2. Unrealized holding gain on investments 56,000 X e. Prepare the fair value adjusting entry required at December 31, year 2. f-2. Calculate the amount of unrealized holding gain (or loss) in the balance sheet at December 31, year 2. HELP KNOWING THIS MIGHT HELP: Calculate the amount of marketable securities reported in the asset section of Charter's balance sheet at December 31, year 1. Marketable securities 416,000 Calculate the amount of unrealized gain or loss reported in the stockholders' equity section of Charter's balance sheet at December 31, year 1. Unrealized holding gain on investments $ 28,000 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.) No Date Debit Credit 1 Apr. 10 57,900 General Journal Cash Marketable securities Gain on sale of investments 44,000 13,900 2 Aug.07 Cash 73,850 10,150 Loss on sale of investments Marketable securities 84.000 Prior to making a mark-to-market adjustment at the end of year 2, determine the unadjusted balance in the Marketable Securities control account. (Assume that no unrealized gains or losses have been recognized since last year.) Marketable securities $ 288,000 Prior to making a mark-to-market adjustment at the end of year 2, determine the Unrealized Holding Gain (or Loss) on Investments account. (Assume that no unrealized gains or losses have been recognized since last year.) Unrealized holding gain on investments 28,000 Prepare a schedule showing the cost and the market values of securities owned at the end of year 2. L Brands, Inc. $ Current Cost Market Value 176,000$ 268,000 84,000 74,000 260,000 $ 342.000 Gap, Inc. Totals $ E------UNKNOWN NEED HELP Record to reduce unadjusted balance in Marketable Securities account to current market value. ? Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Marketable securities Unrealized holding gain on investments ? Calculate the amount of marketable securities in the balance sheet at December 31, year 2. Marketable securities $ 342,000 F2------UNKNOWN ----NEED HELP Calculate the amount of unrealized holding gain or loss) in the balance sheet at December 31, year 2. ? Unrealized holding gain on investments ? Illustrate the presentation of the net realized gains (or losses) in the year 2 income statement. Assume a multiple-step income statement and show the caption identifying the section in which this amount would appear. Non-operating items Net gain on sale of investments $3,750
