Question
MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities
MS buys and sells securities expecting to earn profits on short-term differences in price. The following selected transactions relate to MS's investments in trading securities during 2021-2022. The company's fiscal year ends on December 31. No trading securities were held by MS on Jan 1, 2021. MS tracks stock costs uses the first-in first-out cost-basis assumption.
2021
May 1) Purchased 10,000 shares of Apple stocks for $120 per share
Jun 1) Purchased 10,000 shares of Apple stocks for $115 per share
Jul 1) Sold 15,000 shares of Apple stocks for $125 per share.
Sep 1) Purchased 10,000 shares of Apple stocks for $114 per share
Nov 1)Received dividend $50,000
Dec 31) Market price for Apple is $145 per share
2022
Apr 1) Purchased 10,000 Apple stocks for $160 per share
May 1) Sold 7,000 Apple stocks for $150 per share
July 1) Purchased 10,000 Apple stocks for $180 per share
Aug 1) Sold 5,000 shares of Apple stocks for $190 per share
Dec 31) Market price for Apple is $175 per share
What is the balances of "fair value adjustment" account on Dec 31, 2021?
*Please show to how to get correct answer*
Correct answer: $460,000
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