Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Midwest Bank invests in equity securities. At the beginning of December 2019 , the bank held no equity securities. During December of 2019 , it

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Midwest Bank invests in equity securities. At the beginning of December 2019 , the bank held no equity securities. During December of 2019 , it entered into the following transactions: Dec. 10 Purchased 500 shares of Carroll Company common stock for $76 per share. Dec. 21 Purchased 800 shares of Dynamo Company common stock for $34 per share. At the end of December, the Carroll Company common stock had a quoted market price of $79 per share, and the Dynamo Company common stock had a quoted market price of $33 per share. Required: 1. Prepare journal entries to record the preceding information. 2. What is the unrealized holding gain or loss, and where is it reported in the 2019 financial statements? 3. Show how the bank reports the equity securities on its December 31, 2019, balance sheet. 4. Next Level If Midwest uses IFRS, how would the accounting be different from U.S. GAAP? Chart of Accounts CHART OF ACCOUNTS Midwest Bank General Ledger ASSETS REVENUE 111 Cash 411 Sales Revenue 113 Investment in Equity Securities 121 Accounts Receivable EXPENSES 141 Inventory 500 Cost of Goods Sold 152 Prepaid Insurance 511 Insurance Expense 181 Equipment 512 Utilities Expense 189 Accumulated Depreciation 521 Salaries Expense 532 Bad Debt Expense LIABILITIES 540 Interest Expense 211 Accounts Payable 541 Depreciation Expense 231 Salaries Payable 559 Miscellaneous Expenses 250 Unearned Revenue 910 Income Tax Expense 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings 391 Unrealized Holding Gain/Loss: Equity Securities 1. Prepare journal entries to record the December 2019 transactions. 2. What is the unrealized holding gain or loss, and where is it reported in the 2019 financial statements? At the end of December an unrealized holding of is reported on the 3. Show how the bank reports the equity securities on its December 31,2019 , balance sheet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Information Systems Enhancing Performance Of The Enterprise

Authors: Abraham Nyirongo

1st Edition

1490754997, 9781490754994

More Books

Students also viewed these Accounting questions

Question

Describe the nature of negative messages.

Answered: 1 week ago