Question
Dragon Capital has the following trading investment portfolio on December 31, 2019: Cost Fair Value 5,000 ordinary shares of PVS Corp. $65,000 $37,000 10,000 ordinary
Dragon Capital has the following trading investment portfolio on December 31, 2019:
Cost | Fair Value | |
5,000 ordinary shares of PVS Corp. | $65,000 | $37,000 |
10,000 ordinary shares of Vinamilk, | 150,000 | 165,000 |
TOTAL | $215,000 | $202,000 |
All of the investments had been purchased in 2019. In 2020, Dragon Capital completed the following investment transactions:
March 1: Sold 5,000 ordinary shares of PVS Corp. @ $18 less fees of $1,500.
April 1: Bought 2,000 ordinary shares of CTG Inc. @ $40 plus fees of $550.
The Dragon Capital portfolio of trading investment appeared as follows on December 31, 2020:
Cost | Fair Value | |
10,000 ordinary shares of Vinamilk | $150,000 | $190,500 |
2,000 ordinary shares of CTG Inc. | 80,550 | 75,550 |
TOTAL | $230,550 | $266,050 |
Prepare the general journal entries for Dragon Capital for:
(a) the 2019 adjusting entry.
(b) the sale of the PVS Corp. shares.
(c) the purchase of the CTG Inc's shares.
(d) the 2020 adjusting entry.
(e) Repeat part (d), assuming that Dragon reclassifies this investment portfolio as Held for Collection and Selling.
(f) Assume that Dragon Capital owns 35% of CTG Inc. During year 2020, CTG Inc recorded $60,000 in net income and paid $30,000 in dividend. Make appropriate journal entries.
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