Gruden Bancorp Inc. purchased a portfolio of trading securities during 20Y3, its first year of operations. The cost and fair value of this portfolio on December 31, 20Y3, are as follows:
| 1 | Issuing Company | Cost | Fair Value |
| 2 | Griffin Inc. | $29,200.00 | $32,120.00 |
| 3 | Luck Company | 30,000.00 | 26,400.00 |
| 4 | Wilson Company | 30,600.00 | 26,350.00 |
| 5 | Total | $89,800.00 | $84,870.00 |
On May 10, 20Y4, Gruden Bancorp Inc. purchased trading securities of Carroll Inc. for $25,870.
Required:
| | Journalize the entries to record the following: | a. | The adjusting entry for the portfolio of trading securities on December 31, 20Y3.* | | b. | The May 10, 20Y4, purchase of Carroll Inc. securities.* | | c. | The adjusting entry for the portfolio of trading securities on December 31, 20Y4. Assume that except for the purchase of Carroll Inc. securities there were no other transactions involving trading securities in 20Y4. In addition, assume that the fair value of the portfolio of trading securities on December 31, 20Y4, is $135,740.* | | d. | What amount should be reported for trading investments on the December 31, 20Y4, balance sheet? | | | *Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. | |
| CHART OF ACCOUNTS |
| Gruden 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 | Trading Investments-Carroll Inc. | | 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 on Available-for-Sale Investments | | 351 | Cash Dividends | | 352 | Stock Dividends | | | | REVENUE | | 410 | Sales | | 411 | Interest Revenue | | 412 | Dividend Revenue | | 421 | Income of Carroll Inc. | | 431 | Gain on Sale of Investments | | 641 | Unrealized Gain on Trading Investments | | 642 | Unrealized 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 | |
