Question
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.
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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.
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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.
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