Fair Value jourrnal entries, trading inestments Jets Bancorps Inc. purchased a p
ID: 2418893 • Letter: F
Question
Fair Value jourrnal entries, trading inestments
Jets Bancorps Inc. purchased a portfolio of trading securities during 2014. The cost and fair value of this portfolio on Dec. 31, 2014 was as follows:
Name # of shares Total Cost Total Fair Value
Dolphins Inc. 1,400 $28,000 $30,800
Marino Co. 1,200 30,000 27,600
Namath Co. 800 28,000 26,400
------------------- -------------------
$86,000 $84,800
On May 10, 2015, Jets Bancorp Inc. purchased 1,000 shares of Giants Inc. at 24 per share plus $150 brokerage fee. Provide the journal entries to record the following:
a. The adjustment of the trading security portfolio to fair value on Dec. 31, 2014.
b. The May 10, 2015, purchase of Giants Inc. stock.
Fair value journal entries, trading investments
Last Unguaranteed Financial Inc. purchased the following trading securities during 2014, its first year of operations:
Name Number of Shares Cost
Arden Enterprises Inc. 5,000 $150,000
French Broad Industries Inc. 2,750 66,000
Pisgah Construction Inc. 1,600 104,000
Total $320,000
The market price per share for the trading security portfolio on Dec. 31, 2014, was as follows:
Market price per share,
Dec. 31, 2014
Arden Enterprises Inc. $ 34
French Broad Industries Inc. $ 26
Pisgah Construction Inc. $ 60
a. Provide the journal entry to adjust the trading security portfolio to fair value on Dec. 31, 2014.
b. Assume the market prices of the portfolio were the same on Dec. 31, 2015, as they were on Dec. 31, 2014. What would be the journal entry to adjust the portfolio to fair value?
Explanation / Answer
Q-1:
Name
# of shares
Total Cost
Total Fair Value
Dolphins Inc.
1400
$ 28,000
$ 30,800
Marino Co.
1200
$ 30,000
$ 27,600
Namath Co.
800
$ 28,000
$ 26,400
$ 86,000
$ 84,800
Journal Entries:
Date
Accounts/ Explanation
Debit
Credit
Dec. 31, 2014
Unrealized loss on trading securities (86000-84800)
$ 1,200
Investment - Portfolio
$ 1,200
(Being portfolio valued at fair value)
May. 10, 2015
Investment in shares of Giants Inc. (1000 Shares *24) +150
$ 24,150
Cash
$ 24,150
(Being shares purchased)
Q-1:
Name
# of shares
Total Cost
Total Fair Value
Dolphins Inc.
1400
$ 28,000
$ 30,800
Marino Co.
1200
$ 30,000
$ 27,600
Namath Co.
800
$ 28,000
$ 26,400
$ 86,000
$ 84,800
Journal Entries:
Date
Accounts/ Explanation
Debit
Credit
Dec. 31, 2014
Unrealized loss on trading securities (86000-84800)
$ 1,200
Investment - Portfolio
$ 1,200
(Being portfolio valued at fair value)
May. 10, 2015
Investment in shares of Giants Inc. (1000 Shares *24) +150
$ 24,150
Cash
$ 24,150
(Being shares purchased)
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