Question Two (26 points) At December 31, 2013, Wassel Corporation has the following investments accounts. Securities Cost Fair Value Trading Securities Security A $900,000 $910,000 Security B 105,000 100,000 Totals $1.005.000 $1.010.000 Securities Fair Value Adjustments previous balance-Dt. $20,000 Available-for-Sale Securities 20% (insignificant influence) Security $700,000 $780,000 Security D 900,000 915.000 Totals $1.600.000 $1.695.000 Securities Fair Value Adjustments previous belance-Cr. 535.000 Held-to-Maturity Securities Security E Amortized Cast $54,790 $284,790 Note: The change in fair value is considered permanent. Code Account Code Account Code Account A A Cash H 0 Dividend Revenue B B Trading Securities 1 P Securities Fair Value Adjustments (Trading) Unrealized Holding gain/loss-Income Unrealized Holding gain/loss-Equity Income Summary Interest Revenue J Q Gain on sale of Securities K D Available for Sale Securities Held-16-Maturity Securities Securities Fair Value Adjustments R Loss on sale of Securities L E E S Accumulated Other Comprehensive Income Loss on Impairment Interest Receivable M F T Equity levestment in Stock (AFS) Dividends Receivable Revenue from Investments N Loss on Investments U G Equity Investment in D Stock Required Prepare the general journal entry for each of the following events by filling the related CODE and AMOUNT from the list of accounts provided above. Debit Credit Code Amount Code Amount Events 1. Adjusting entry at Dec 31, 2013, to report the trading portfolio at fair value. 2. Close the unrealized gain/loss on trading portfolio securities. 3. Adjusting entry at Dec 31, 2013, to report the APS portfolio at fair value 4. Close the unrealized gain/loss on AFS portfolio securities 5. Report the purchase on Jan. 1, 2013 of 995 bonds, Security "E", having a maturity value of $300,000 for 5278,384. The interest is payable each Bec 31, and the bonds mature Dec 31, 2015. The bonds provide Wassel a 12% yield. The bonds are classified as held-to-maturity 6. Report the receipt of interest for Security "E" on Dec 31, 2013 and the discount amortization 7. Report the permanent change in fair value of Security "E". 8. On Jan 15, 2014 the Investee announced and paid cash dividends of $200,000 on Security "D" 9. Assume that on the date of acquisition, Wassel chose to report the investment in security "C" using the Fair Valuc Option. Report the adjusting entry at Dec 31, 2013 10. Assume that Wassel can exercise significant influence from the 20% investment in security "D" On Dec 31, 2013 the investee reported net income of $800,000 11. On Jan 15, 2014 the investee announced and paid cash dividends of $200,000 on Security "D". Assume significant influence 12. On Jan. 30, 2014, Wassel sold security "A" for $910,000
