While reviewing the March 31, 2014, balance sheet of Success Systems, Adria Lopez notes that the business
Question:
While reviewing the March 31, 2014, balance sheet of Success Systems, Adria Lopez notes that the business has built a large cash balance of $ 77,845. Its most recent bank money market statement shows that the funds are earning an annualized return of 0.75%. Adria Lopez decides to make several in-vestments with the desire to earn a higher return on the idle cash balance. Accordingly, in April 2014, Success Systems makes the following investments in trading securities:
April 16 Purchases 400 shares of Johnson & Johnson stock at $ 50 per share plus $ 300 commission.
April 30 Purchases 200 shares of Starbucks Corporation at $ 22 per share plus $ 250 commission.
On June 30, 2014, the per share market price (fair value) of the Johnson & Johnson shares is $ 55 and the Starbucks shares is $ 19.
Required
1. Prepare journal entries to record the April purchases of trading securities by Success Systems.
2. On June 30, 2014, prepare the adjusting entry to record any necessary fair value adjustment to its port-folio of trading securities.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Part 1 2014 April 16 ShortTerm InvestmentsTrading JJ 20300 Cash 2...View the full answer
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
