Stock investment transactions, trading securities Instructions Chart of Accounts
ID: 2469988 • Letter: S
Question
Stock investment transactions, trading securities Instructions Chart of Accounts Amount Descriptions Journal Balance Sheet Final Question Scofield Financial Co. is a regional insurance company that began operations on January 1, 2016. The following transactions relate to trading securities acquired by Scofield Financial Co., which has a fiscal year ending on December 31: Record these transactions on page 10: 2016 Mar. 14 Purchased 5,000 shares of Wilkomm Inc. as a trading security at $40 per share plus a brokerage commission of $500. Apr. 24 Purchased 1,800 shares of McMarsh Inc. as a trading security at $50 plus a brokerage commission of $198. Jun. 1 Sold 2,600 shares of Wilkomm Inc. for $38 per share less a $100 brokerage commission. 30 Received an annual dividend of $0.35 per share on Wilkomm Inc. stock. Dec. 31 The portfolio of trading securities was adjusted to fair values of $38 and $49 per share for Wilkomm Inc. and McMarsh Inc., respectively. Record these transactions on page 11: 2017 Apr. 4 Purchased 3,500 shares of Daley Inc. as a trading security at $30 per share plus a $175 brokerage commission. Jun. 28 Received an annual dividend of $0.40 per share on Wilkomm Inc. stock. Sep. 9 Sold 700 shares of Daley Inc. for $32 per share less a $50 brokerage commission. Dec. 31 The portfolio of trading securities had a cost of $270,578 and a fair value of $350,000, requiring a debit balance in Valuation Allowance for Trading Investments of $79,422 ($350,000 -$270,578). Thus, the credit balance from December 31, 2016, is to be adjusted to the new balance. Required: A. Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. B. Prepare the investment-related current asset balance sheet presentation for Scofield Financial Co. on December 31, 2017. C. How are unrealized gains and losses on trading investments presented in the financial statements? * Refer to the information given and the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Explanation / Answer
2016 Transactions Date Account Title Dr $ Cr $ Average cost Mar 14.2016. Investment in Trading Security-Wilkomm Inc 200,500 40.10 Cash 200,500 (Investment in Wilkomm Inc , 5000 shares) Apr 24.2016. Investment in Trading Security-McMarsh. Inc 90,198 50.11 Cash 90,198 (Investment in McMarsh Inc , 1800 shares) June 1.2016. Investment in Trading Security-Wilkomm Inc 104,260 Cash 98,700 Loss On Sale Of Investment 5,560 (sale of 2600 Wilkomm shares @38 less $100 commission) Jun 30.2016 Dividend Income 840 Cash 840 ( Dividend received @$0.35 per share for Wilkomm Inc) Dec 31. 2016. Valuation Allowance for Trading Investment 7,038 Unrealized Holding Gain/(Loss) on Trading Investment 7,038 ( Fair value adjustment @$2.1 for Wilkomm shares , 2400 nos & @$1.11 for 1800 McMarsh Shares) 2017 Transactions Date Account Title Dr $ Cr $ Apr 4.2017. Investment in Trading Security- Daley . Inc 105,175 30.05 Cash 105,175 ( purchase of 3500 Daley inc shares ) Jun 28.2017. Dividend Income 960 Cash 960 ( Dividend received @$0.40 per share for Wilkomm Inc) Sep 9.2017. Investment in Trading Security- Daley . Inc 21,035 Cash 22,350 Gain In Sale Of Invetsment 1,315 (sale of 700 Daley inc shares) Dec 31.2017. Valuation Allowance for Trading Investment 86,460 Unrealized Holding Gain/(Loss) on Trading Investment 86,460 ( FV Adjustment of Allowance a/c to $79422) Scofield Financial Co Balance Sheet (Partial) As on 31 Dec 2017. Details Amt $ Current Asset Investment in Trading Security-Wilkomm Inc 96,240 Investment in Trading Security-McMarsh. Inc 90,198 Investment in Trading Security- Daley . Inc 84,140 Valuation Allowance for Trading Investment 79,422 Fair Value of Trading investment 350,000
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