Question
Scofield Financial Co. is a regional insurance company that began operations on January 1, 2016. The following transactions relate to trading securities acquired by Scofield
Scofield Financial Co. is a regional insurance company that began operations on January 1, 2016. The following transactions relate to trading securities acquired by Scofield Financial Co., which has a fiscal year ending on December 31:
Record these transactions on page 10:
2016 | ||
---|---|---|
Mar. | 14 | Purchased 7,400 shares of Wilkomm Inc. as a trading security at $38 per share plus a brokerage commission of $740. |
Apr. | 24 | Purchased 1,700 shares of McMarsh Inc. as a trading security at $55 plus a brokerage commission of $187. |
Jun. | 1 | Sold 3,850 shares of Wilkomm Inc. for $36 per share less a $105 brokerage commission. |
30 | Received an annual dividend of $0.25 per share on Wilkomm Inc. stock. | |
Dec. | 31 | The portfolio of trading securities was adjusted to fair values of $36 and $54 per share for Wilkomm Inc. and McMarsh Inc., respectively. |
Record these transactions on page 11:
2017 | ||
---|---|---|
Apr. | 4 | Purchased 3,000 shares of Daley Inc. as a trading security at $25 per share plus a $150 brokerage commission. |
Jun. | 28 | Received an annual dividend of $0.45 per share on Wilkomm Inc. stock. |
Sep. | 9 | Sold 600 shares of Daley Inc. for $27 per share less a $60 brokerage commission. |
Dec. | 31 | The portfolio of trading securities had a cost of $289,062 and a fair value of $366,663, requiring a debit balance in Valuation Allowance for Trading Investments of $77,601 ($366,663 -$289,062). Thus, the credit balance from December 31, 2016, is to be adjusted to the new balance. |
Required: | |||
A. | Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. | ||
B. | Prepare the investment-related current asset balance sheet presentation for Scofield Financial Co. on December 31, 2017. | ||
C. | How are unrealized gains and losses on trading investments presented in the financial statements?
|
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 |
| ||||
2 |
| ||||
3 |
| ||||
4 |
| ||||
5 |
| ||||
6 |
| ||||
7 |
| ||||
8 |
| ||||
9 |
| ||||
10 |
| Adjusting Entries |
|
|
|
11 |
| ||||
12 |
| ||||
1 |
| ||||
2 |
| ||||
3 |
| ||||
4 |
| ||||
5 |
| ||||
6 |
| ||||
7 |
| ||||
8 |
| ||||
9 |
|
Solution
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | |
---|---|---|---|---|---|
1 |
|
|
|
|
|
2 |
|
|
|
|
|
3 |
|
|
|
|
|
4 |
|
|
|
|
|
5 |
|
|
|
|
|
6 |
|
|
|
|
|
7 |
|
|
|
|
|
8 |
|
|
|
|
|
9 |
|
|
|
|
|
10 |
| Adjusting Entries |
|
|
|
11 |
|
|
|
|
|
12 |
|
|
|
|
|
1 |
|
|
|
|
|
2 |
|
|
|
|
|
3 |
|
|
|
|
|
4 |
|
|
|
|
|
5 |
|
|
|
|
|
6 |
|
|
|
|
|
7 |
|
|
|
|
|
8 |
|
|
|
|
|
9 |
|
|
|
|
|
Scofield Financial Co. |
Balance Sheet (selected Current Asset items) |
December 31, 2017 |
1 | Current assets: |
|
|
2 |
| ||
3 |
| ||
4 |
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started