Question:

Prepare all journal entries relating to these investments for both 2017 and 2018. Briefly discuss why these investments are valued at current market value while other assets such as property, plant and equipment are not adjusted to fair market value.

Radical Resources Inc. (Radical) is an investment company that recently raised $5,000,000 from a public financing. The Board of Directors has instructed the CFO to invest up to $3,000,000 in investments which it intends to actively trade and therefore will account at fain value through profit or loss On the advice of the company's investment advisor, the following shares were purchased in October 2017 Investment # of shares Total cost Giant Ind Monarch Bank of America Scott Resources Ltd 20,000 30,000 100,000 1,000,000 600,000 100,000 During December 2017, Radical received cash dividends of $25,000 from its investment in Monarch Bank of America. In 2018, the following transactions took place January 25 50,000 shares of Scott Resources Ltd. were purchased for May 17 June 17 September 25 110,000 shares of Scott Resources Ltd. were sold for net proceeds (i.e. after $125,000 6,000 shares of Monarch Bank of America were sold at S90 per share 75,000 shares of Lucky Resources were purchased at $15 per share commissions) for $275,000. (For the purposes of determining the cost of shares sold, use the weighted average cost) As part of its banking arrangement, the company pays no commissions on the purchase of shares but is charged a 2% commission on the sale of all investments Market Price of investments - presented on a per share basis Investment January 1, December December 31, 2017 31, 2017 2018 Giant Inc Monarch Bank of America Scott Resources Ltd Lucky Resources $110.00 27.00 1.50 9.00 $105.00 13.00 2.00 13.00 S140.00 45.00 1.10 16.00 Radical Resources Inc. (Radical) is an investment company that recently raised $5,000,000 from a public financing. The Board of Directors has instructed the CFO to invest up to $3,000,000 in investments which it intends to actively trade and therefore will account at fain value through profit or loss On the advice of the company's investment advisor, the following shares were purchased in October 2017 Investment # of shares Total cost Giant Ind Monarch Bank of America Scott Resources Ltd 20,000 30,000 100,000 1,000,000 600,000 100,000 During December 2017, Radical received cash dividends of $25,000 from its investment in Monarch Bank of America. In 2018, the following transactions took place January 25 50,000 shares of Scott Resources Ltd. were purchased for May 17 June 17 September 25 110,000 shares of Scott Resources Ltd. were sold for net proceeds (i.e. after $125,000 6,000 shares of Monarch Bank of America were sold at S90 per share 75,000 shares of Lucky Resources were purchased at $15 per share commissions) for $275,000. (For the purposes of determining the cost of shares sold, use the weighted average cost) As part of its banking arrangement, the company pays no commissions on the purchase of shares but is charged a 2% commission on the sale of all investments Market Price of investments - presented on a per share basis Investment January 1, December December 31, 2017 31, 2017 2018 Giant Inc Monarch Bank of America Scott Resources Ltd Lucky Resources $110.00 27.00 1.50 9.00 $105.00 13.00 2.00 13.00 S140.00 45.00 1.10 16.00