Question
During 2020, Financial Holdings, a public company, purchased equity securities for trading purposes. At December 31, 2020, the securities for Financial Holdings were as follows:
During 2020, Financial Holdings, a public company, purchased equity securities for trading purposes. At December 31, 2020, the securities for Financial Holdings were as follows:
| Security | Quantity | Cost | Market Value | |||||
| Sabo common shares | 1,000 | $14,000 | $12,500 | |||||
| PYK $1.50 preferred shares | 2,000 | 22,000 | 22,500 | |||||
| Total | $36,000 | $35,000 | ||||||
The following transactions with respect to Financial Holdings investments occurred during 2021:
| Jan. | 15 | Purchased 1,500 common shares of Hazmi for $16.00 per share. The shares are designated as fair value through other comprehensive income. | |
| Mar. | 20 | Received dividends on the PYK preferred shares of $1.50 per share. | |
| June | 15 | Sold 750 of the Sabo common shares for $14.75 per share. | |
| Aug. | 5 | Received dividends on the Sabo common shares of $2.00 per share. | |
| Oct. | 15 | Received an additional 1,500 common shares of Hazmi as a result of a 2-for-1 stock split. |
At December 31, 2021, the securities held by Financial Holdings were trading on the TSX at the following prices:
| Security | Price | ||
| Sabo common shares | $15.00 | ||
| PYK $1.50 preferred shares | 12.75 | ||
| Hazmi common shares | 7.50 |
Show how the securities would be reported on Financial Holdings December 31, 2020, balance sheet.
| FINANCIAL HOLDINGS Balance Sheet (Partial) Quarter Ended December 31, 2020December 31, 2020Year Ended December 31, 2020 | ||
| Current LiabilitesIntangible AssetsTotal Current LiabilitesCurrent AssetsTotal Current Assets | ||
| Interest PayableInvestments at Fair Value through Profit or LossInterest ReceivableBonds PayableShort-Term Investment-Term Deposit | $ | |
Record Financial Holdings 2021 transactions and any required adjusting journal entries at December 31, 2021.
| Date | Account Titles and Explanation | Debit | Credit |
| Jan. 15Mar. 20June 15Aug. 5Oct. 15Dec. 31 | |||
| (To record purchase of investment.) | |||
| Jan. 15Mar. 20June 15Aug. 5Oct. 15Dec. 31 | |||
| (Collection of dividend.) | |||
| Jan. 15Mar. 20June 15Aug. 5Oct. 15Dec. 31 | |||
| (To record sale of investment.) | |||
| Jan. 15Mar. 20June 15Aug. 5Oct. 15Dec. 31 | |||
| (Collection of dividend.) | |||
| Jan. 15Mar. 20June 15Aug. 5Oct. 15Dec. 31 | |||
| Jan. 15Mar. 20June 15Aug. 5Oct. 15Dec. 31 | |||
| (To record fair value adjustment.) | |||
| Jan. 15Mar. 20June 15Aug. 5Oct. 15Dec. 31 | |||
| (To record fair value adjustment.) |
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Accounting
Authors: Carl S. Warren, Christine Jonick, Jennifer Schneider
28th Edition
1337902683, 978-1337902687
