Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Whispering Company has the following securities in its investment portfolio on December 31, 2020 (all securities were purchased in 2020): (1) 2,800 shares of Anderson

image text in transcribedimage text in transcribed

Whispering Company has the following securities in its investment portfolio on December 31, 2020 (all securities were purchased in 2020): (1) 2,800 shares of Anderson Co. common stock which cost $56,000, (2) 10,500 shares of Munter Ltd. common stock which cost $588,000, and (3) 6,000 shares of King Company preferred stock which cost $252,000. The Fair Value Adjustment account shows a credit of $10,600 at the end of 2020. In 2021, Whispering completed the following securities transactions. 1. 2. On January 15, sold 2,800 shares of Anderson's common stock at $22 per share less fees of $2,320. On April 17, purchased 1,000 shares of Castle's common stock at $34 per share plus fees of $1,800. On December 31, 2021, the market prices per share of these securities were Munter $64, King $40, and Castle $20. In addition, the accounting supervisor of Whispering told you that, even though all these securities have readily determinable fair values, Whispering will not actively trade these securities because the top management intends to hold them for more than one year. (a) Your answer is correct. for the amounts.) Prepare the entry for the security sale on January 15, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Date Account Titles and Explanation Debit Credit Jan. 15, 2021 TCash 592801 Gain on Sale of Investn 3280 Equity Investments 56000 SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Attempts: 1 of 5 used (b) Your answer is correct. Prepare the journal entry to record the security purchase on April 17, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Apr. 17, 2021 Equity Investments 35800 cash 35800 (b) Your answer is correct. Prepare the journal entry to record the security purchase on April 17, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Apr. 17, 2021 Equity Investments 35800 cash 35800 SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Attempts: 1 of 5 used (c) Your answer is partially correct. Try again. Compute the unrealized gains or losses. Unrealized Gain Prepare the adjusting entry for Whispering on December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2021 Fair Value Adjustment Unrealized Holding Gain or

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

50 + Fun Financial Accounting Cases

Authors: Thomas E. McKee

1st Edition

1257824538, 978-1257824533

More Books

Students also viewed these Accounting questions

Question

5. Describe the central limit theorem.

Answered: 1 week ago