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Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair value of this portfolio on December 31, Year 1,

Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair value of this portfolio on December 31, Year 1, was as follows:

1

Name

Number of Shares

Total Cost

Total Fair Value

2

Griffin Inc.

1,310.00

$26,200.00

$28,820.00

3

Luck Company

1,260.00

32,760.00

28,980.00

4

Wilson Company

840.00

30,240.00

27,720.00

5

Total

$89,200.00

$85,520.00

On May 10, Year 2, Gruden Bancorp Inc. purchased 1,020 shares of Carroll Inc. at $25 per share plus a $155 brokerage commission.

Required:

A. Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31, Year 1.*
B. Provide the journal entry to record the May 10, Year 2, purchase of Carroll Inc. stock.*

*Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTSGruden Bancorp Inc.General Ledger

ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
121 Allowance for Doubtful Accounts
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
161 Investments-Carroll Inc Stock
165 Valuation Allowance for Trading Investments
166 Valuation Allowance for Available-for-Sale Investments
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
231 Interest Payable
241 Salaries Payable
251 Sales Tax Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Treasury Stock
332 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
350 Unrealized Gain (Loss) on Available-for-Sale Investments
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
411 Interest Revenue
412 Dividend Revenue
421 Income of Carroll Inc
431 Gain on Sale of Investments
641 Unrealized Gain (Loss) on Trading Investments
EXPENSES
511 Cost of Merchandise Sold
512 Bad Debt Expense
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
561 Depreciation Expense-Store Equipment
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
721 Loss of Carroll Inc
731 Loss on Sale of Investments

A. Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

B. Provide the journal entry to record the May 10, Year 2, purchase of Carroll Inc. stock. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY

1

2

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