Oregon Co. had purchased 376 shares of Washington Co. for $51 each this year and

Question

Oregon Co. had purchased 376 shares of Washington Co. for $51 each this year and classified the investment as a trading security. Oregon Co. sold 154 shares of the stock for $55 each. At year-end, the price per share of the Washington Co. stock had dropped to $34. Prepare the journal entries for these transactions and any year-end adjustments. (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 0 for the amounts.) Account Titles and Explanation Debit Credit (To record the purchase.) (To record the sale.) (To record the fair value.)

Explanation / Answer

Journal Entries:

1. Purchases A/c Dr (376*51)= $19176

To Cash $ 19176

(Being Purchases made during the year)

2.cash A/c Dr $8470

To Sales $8470

( Being 154 Shares sold@ $55)

3. Trading A/c Dr 19176

To Purchases 19176

4.Sales A/c Dr 8470

To Trading 8470

5.Closing Stock A/c Dr (376-154)*34= $7548

To Trading $7548

(Being Stock recorded at year end rate)

4. Trading A/c Dr $3158

To Loss $3158

(Being loss recorded)

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