Question
Rios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by
Rios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Rios Financial Co., which has a fiscal year ending on December 31:
Record these transactions on page 10:
Year 1 | ||
Feb. | 1. | Purchased 6,300 shares of Caldwell Inc. as a trading security at $41 per share plus a brokerage commission of $630. |
May | 1. | Purchased 1,700 shares of Holland Inc. as a trading security at $47 plus a brokerage commission of $187. |
July | 1. | Sold 3,280 shares of Caldwell Inc. for $39 per share less a $110 brokerage commission. |
31. | Received an annual dividend of $0.35 per share on Caldwell Inc. stock. | |
Dec. | 31. | The portfolio of trading securities was adjusted to fair values of $39 and $46 per share for Caldwell Inc. and Holland Inc., respectively. |
Record these transactions on page 11:
Year 2 | ||
Apr. | 1. | Purchased 2,700 shares of Fuller Inc. as a trading security at $28 per share plus a $135 brokerage commission. |
July | 31. | Received an annual dividend of $0.40 per share on Caldwell Inc. stock. |
Oct. | 14. | Sold 540 shares of Fuller Inc. for $30 per share less a $55 brokerage commission. |
Dec. | 31 | The portfolio of trading securities had a cost of $264,797 and a fair value of $341,549, requiring a debit balance in Valuation Allowance for Trading Investments of $76,752 ($341,549 - $264,797). Thus, the credit balance from December 31, Year 1, is to be adjusted to the new balance. |
Required: | |||
1. | Journalize the entries to record these transactions. Round all final amounts to the nearest whole dollar.* | ||
2. | Prepare the investment-related current asset balance sheet presentation for Rios Financial Co. on December 31, Year 2.* | ||
3. | How are unrealized gains or losses on trading investments presented in the financial statements of Rios Financial Co.?
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Chart of Accounts
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Amount Descriptions
Amount Descriptions | |
Increase in retained earnings | |
Net income | |
Net loss | |
Other comprehensive income (loss) | |
Other income (loss) | |
Retained earnings, December 31, Year 2 | |
Retained earnings, January 1, Year 2 | |
Trading investments (at cost) | |
Trading investments (at fair value) |
Journal
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1a. Journalize the entries to record these transactions. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places. Round all final amounts to the nearest whole dollar.
Question not attempted.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
Score: 0/138
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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1b. Journalize the entries to record these transactions. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places.
Question not attempted.
PAGE 11
JOURNAL
ACCOUNTING EQUATION
Score: 0/113
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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