On December 21, 2017, Pearl Company provided you with the following information

Question

On December 21, 2017, Pearl Company provided you with the following information regarding its equity investments.

December 31, 2017

Investments (Trading)

Cost

Fair Value

Unrealized Gain (Loss)

During 2018, Colorado Company stock was sold for $10,290. The fair value of the stock on December 31, 2018, was Clemson Corp. stock—$17,390; Buffaloes Co. stock—$18,830. None of the equity investments result in significant influence.

Prepare the adjusting journal entry needed on December 31, 2018.

December 31, 2017

Investments (Trading)

Cost

Fair Value

Unrealized Gain (Loss)

Clemson Corp. stock $18,300 $17,300 $(1,000 ) Colorado Co. stock 10,900 9,800 (1,100 ) Buffaloes Co. stock 18,300 18,920 620 Total of portfolio $47,500 $46,020 (1,480 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,480 )

Explanation / Answer

SOLUTION

Fair value adjustment for 2018

S.No. Accounts titles and Explanation Debit ($) Credit ($) A. Unrealized Holding Gain or Loss - Income 1,480 Fair value Adjustment 1,480 B. Cash 10,290 Loss on Sale of Investment (10,900-10,290) 610 Equity Investment (trading) 10,900 C. Fair value Adjustment 1,100 Unrealized Holding Gain or Loss - Income 1,100

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.