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Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations: Name Number of Shares Cost Dust Devil, Inc. 1,860 $79,980

Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations:

Name Number of Shares Cost
Dust Devil, Inc. 1,860 $79,980
Gale Co. 820 65,600
Whirlwind Co. 2,870 111,930
Total $257,510

The market price per share for the available-for-sale security portfolio on December 31, Year 1, was as follows:

Market Price per Share,

Dec. 31, Year 1

Dust Devil, Inc. $39
Gale Co. 74
Whirlwind Co. 42

Required:

A. Provide the journal entry to adjust the available-for-sale security portfolio to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles.
B. Describe the income statement impact from the December 31, Year 1, journal entry.
CHART OF ACCOUNTS
Storm, Inc.
General Ledger
ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
121 Allowance for Doubtful Accounts
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
161 Trading Investments
162 Available-for-Sale Investments
165 Valuation Allowance for Trading Investments
166 Valuation Allowance for Available-for-Sale Investments
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
231 Interest Payable
241 Salaries Payable
251 Sales Tax Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Treasury Stock
332 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
350 Unrealized Gain (Loss) on Available-for-Sale Investments
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
611 Interest Revenue
612 Dividend Revenue
631 Gain on Sale of Investments
641 Unrealized Gain on Trading Investments
EXPENSES
511 Cost of Merchandise Sold
512 Bad Debt Expense
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
561 Depreciation Expense-Store Equipment
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
731 Loss on Sale of Investments
741 Unrealized Loss on Trading Investments

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Fair value journal entries, available-for-sale investments Instructions Chart of Accounts Journal Final Question Instructions Journal Shaded cells have feedback A. Provide the journal entry to adjust the available-for-sale security portfolio to fair value on December 31, Year 1. Refer to the Chart of Accounts for exact wording of account titles. How does grading work? PAGE 10 JOURNAL Score: 19/25 ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY Adjusting Entries 2 Dec. 31 Valuation Allowance for Available-for-Sale Investments 8,610.00 1 3 Unrealized Gain (Loss) on Available-for-Sale Investments 8,610.00 1 Fair value journal entries, available-for-sale investments Instructions Chart of Accounts Journal Final Question Instructions Journal Shaded cells have feedback. X Final Question Shaded cells have feedback B. Describe the income statement impact from the December 31, Year 1, journal entry. There is no income statement impact from the December 31, Year 1, adjusting entry. Unrealized Gain (Loss) on Available for Sale Investments is reported in the Stockholders' Equity section of the balance sheet Points: 2 / 2 On December 31, Year 1, Unrealized Gain or Loss on Available-for-Sale Investments would be disclosed as follows (if a loss, use a minus sign): Unrealized gain (loss) on available for sale investments: $8,610 X Points: 0/1

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