Everything is here. Look in the bottom labeled 1, 2 and 3.
13. Nejedly Capital Partners, Ltd. acquired the following equity investments at the beginning of year 1 to be held in a trading portfolio *(Click the icon to view the equity investments.) Share prices at the end of years 1 and 2 are presented below. 2(Click the icon to view the share prices at the end of years 1 and 2.) Read the requirements Requirement a. Prepare the journal entry to record the acquisition of the investments. (Prepare a single compound entry. Record debits first, then credits. Exclude explanations from any journal entries.) Account Trading Equity Investments Cash Acquisition 796,200 796,200 Requirement b. Prepare the journal entry to record the end of year 1 adjusting entry. (Prepare a single compound entry. Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required select "No Entry Required" on the first line of the journal entry table and leave all remaining cells in the table blank.) December 31, Year 1 Account ||(1) Unrealized Gain/Loss - Net Income (2) Fair Value Adjustment-Trading Equity Investments Requirement c. Assume that Nejedly sells 19,100 ALP Company shares for $12 per share at the beginning of year 2. Prepare the journal entry required to record the sale. Nejedly does not correct the fair value adjustment account at this time. (Prepare a single compound entry. Record debits first, then credits. Exclude explanations from any journal entries.) Account Beginning of Year 2 Requirement d. Prepare the journal entry to record the end of year 2 adjusting entry. (Prepare a single compound entry. Record debits first, then credits. Exclude explanations from any journal entries. If no entry is required select "No Entry Required" on the first line of the journal entry table and leave all remaining cells in the table blank.) Account December 31, Year 2 (9) (10) (11) Requirement e. What is the effect of these investments on earnings in years 1 and 2? (Use a minus sign or parentheses for any loss amounts.) Gain (Loss) Portfolio Basis Year 1 unrealized gain (loss) in earnings Year 2 realized loss on disposal Year 2 unrealized gain (loss) in earnings Total effect on earnings 1: Data Table ALP Description Number of shares Hiawatha Brothers 15,800 x $ 27 $ 426,600 Company 23,100 Market price per share 16 369,600 Share acquisition price 2: Data Table Fair Value End of year 1 End of year 2 Hiawatha Brothers $ 19 $ 26 ALP Company $ 19 $ 27 3: Requirements a. Prepare the journal entry to record the acquisition of the investments. b. Prepare the journal entry to record the end of year 1 adjusting entry. C. Assume that Nejedly sells 19,100 ALP Company shares for $12 per share at the beginning of year 2. Prepare the journal entry required to record the sale. Nejedly does not correct the fair value adjustment account at this time. d. Prepare the journal entry to record the year 2 adjusting entry. e. What is the effect of these investments on earnings in years 1 and 2
