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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 5,000 shares of Wilkomm Inc. as a trading security at $40 per share plus a brokerage commission of $500. |
Apr. | 24 | Purchased 1,800 shares of McMarsh Inc. as a trading security at $50 plus a brokerage commission of $198. |
Jun. | 1 | Sold 2,600 shares of Wilkomm Inc. for $38 per share less a $100 brokerage commission. |
30 | Received an annual dividend of $0.35 per share on Wilkomm Inc. stock. | |
Dec. | 31 | The portfolio of trading securities was adjusted to fair values of $38 and $49 per share for Wilkomm Inc. and McMarsh Inc., respectively. |
Record these transactions on page 11:
2017 | ||
---|---|---|
Apr. | 4 | Purchased 3,500 shares of Daley Inc. as a trading security at $30 per share plus a $175 brokerage commission. |
Jun. | 28 | Received an annual dividend of $0.40 per share on Wilkomm Inc. stock. |
Sep. | 9 | Sold 700 shares of Daley Inc. for $32 per share less a $50 brokerage commission. |
Dec. | 31 | The portfolio of trading securities had a cost of $270,578 and a fair value of $350,000, requiring a debit balance in Valuation Allowance for Trading Investments of $79,422 ($350,000 -$270,578). 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?
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