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Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on
Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. 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 | Tornado Inc. | 800.00 | $13,840.00 | $16,000.00 |
3 | Tsunami Corp. | 1,260.00 | 31,122.00 | 36,540.00 |
4 | Typhoon Corp. | 2,140.00 | 43,656.00 | 43,228.00 |
5 | Total |
| $88,618.00 | $95,768.00 |
On June 12, Year 2, Hurricane purchased 1,430 shares of Rogue Wave Inc. at $43 per share plus a $115 brokerage commission.
Required:
A. | Provide the journal entries to record the following (refer to the Chart of Accounts for exact wording of account titles):
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B. | How are unrealized gains and losses treated differently for available-for-sale securities than for trading securities? |
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