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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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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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