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 600 shares of Carroll Company common stock for $75 per share.
Dec. 21	Purchased 700 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 $78 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 ACCOUNTSMidwest BankGeneral Ledger

	ASSETS
111	Cash
113	Investment in Equity Securities
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense
912	Unrealized Holding Gain/Loss-Equity Securities

1. Prepare journal entries to record the December 2019 transactions.

General Journal Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6

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.

Balance Sheet Instruction

Midwest Bank

Partial Balance Sheet

December 31, 2019

1	Current assets:
2	___________	__________________

4. Under IFRS, if Midwest makes the election to eliminate an accounting mismatch, where would holding gains and losses be reported?

Assets

Stockholders' Equity

Net income

Liabilities