Puppy Company has the following securities in its investment portfolio on Decemb
ID: 2477511 • Letter: P
Question
Puppy Company has the following securities in its investment portfolio on December 31, 2015 (all securities were purchased in 2015) FMV per Number of Cost Per share at Shares Share Dec. 31, 2015 Trading Securities ("Trading"): Anderson Co. common stock 4,500 $15.00 $20.00 Munter Ltd. Common stock 12,000 40.00 28.00 Available for Sale Securities ("AFS"): King Company preferred stock 6,000 20.00 53.00 During 2016, Puppy Company completed the following security transactions: Number of Selling Price Purchase Price Shares Per Share Per Share Jan. 15 Sold 1/2 of the Anderson Co. common stock $22.00 Feb. 3 Sold all the Munter Ltd. Common stock 82.00 Apr. 17 Purchased Castle Co. common stock 1,100.00 $33.50 AFS Apr. 30 Sold remaining Anderson Co. stock 25.00 Jun. 10 Purchase McGrath Co. preferred stock 5,250 41.00 AFS Sept. 14 Purchased Oakwood common stock 1,000 180.00 AFS Oct. 31 Purchased Mountain Co. common stock 3,600 38.00 Trading Dec. 1 Purchased McGraw preferred stock 200 185.00 Trading At December 31, 2016, the FMV per share of the investments were: FMV per share at Dec. 31, 2016 Trading Securities: Mountain Co. common stock $30.00 McGraw Co. preferred stock 200.00 Available for Sale Securities: King Company preferred stock 47.00 Castle Co. common stock 36.00 McGrath Co. preferred stock 37.00 Oakwood common stock 186.00 Required: 1. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2015. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income. 2. Prepare the journal entries to record the 2016 investment transactions. 3. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2016. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income. Puppy Company has the following securities in its investment portfolio on December 31, 2015 (all securities were purchased in 2015) FMV per Number of Cost Per share at Shares Share Dec. 31, 2015 Trading Securities ("Trading"): Anderson Co. common stock 4,500 $15.00 $20.00 Munter Ltd. Common stock 12,000 40.00 28.00 Available for Sale Securities ("AFS"): King Company preferred stock 6,000 20.00 53.00 During 2016, Puppy Company completed the following security transactions: Number of Selling Price Purchase Price Shares Per Share Per Share Jan. 15 Sold 1/2 of the Anderson Co. common stock $22.00 Feb. 3 Sold all the Munter Ltd. Common stock 82.00 Apr. 17 Purchased Castle Co. common stock 1,100.00 $33.50 AFS Apr. 30 Sold remaining Anderson Co. stock 25.00 Jun. 10 Purchase McGrath Co. preferred stock 5,250 41.00 AFS Sept. 14 Purchased Oakwood common stock 1,000 180.00 AFS Oct. 31 Purchased Mountain Co. common stock 3,600 38.00 Trading Dec. 1 Purchased McGraw preferred stock 200 185.00 Trading At December 31, 2016, the FMV per share of the investments were: FMV per share at Dec. 31, 2016 Trading Securities: Mountain Co. common stock $30.00 McGraw Co. preferred stock 200.00 Available for Sale Securities: King Company preferred stock 47.00 Castle Co. common stock 36.00 McGrath Co. preferred stock 37.00 Oakwood common stock 186.00 Required: 1. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2015. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income. 2. Prepare the journal entries to record the 2016 investment transactions. 3. Prepare the journal entry to record the fair market adjustments for both the trading and available for sale securities at December 31, 2016. Indicated whether any unrealized holding gains/loss appear on the income statement or as part of accumulated other comprehensive income.Explanation / Answer
Journal entries
2015
Trading securities –Anderson con
$22,500
To Unrealized holding gain or loss
(4500*5) – income statement
$22,500
Unrealized gain or loss (income statement)
$144,000
To trading securities – Munter ltd(12,000*12)
$144,000
AFS- King company preferred Stock
198,000
To unrealized holding gain or loss - OCI
198,000
2016
Cash (2250*22)
$49,500
To Trading securities – Anderson(4500*20*1/2)
$45,000
To Gain on sale
Feb 3 Cash (12,000*82)
984,000
To Trading securities – Munter (12,000*28)
336,000
To Gain on sale
648,000
April 17
AFS – Castle co
$368,500
To Cash (11000*33.50)
$368,500
April 30
Cash (2250*25)
$56,250
To Trading securities – Anderson (2250*20)
$45,000
To Gain on sale
11,250
June 10
AFS-McGrath
$215,250
To Cash
(5,250*41)
$212,250
Sept 14
AFS-Oakwood
180,000
To Cash
(1000*180)
180,000
Oct 31
Trading securities – Mountain co
$136,800
To Cash
(3600*38)
$136,800
Dec 1
Trading securities -McGraw
$37,000
To Cash (200*185)
$37,000
2016
Trading securities – income statement
Unrealized holding gain or loss
$28,800
To Trading securities Mountain co
(3600*8)
$28,800
Trading securities
$3,000
To unrealized holding gain or loss
(200*15)
$3,000
Available for sale securities
Other comprehensive income
Unrealized holding gain or loss
36,000
To AFS-King co
$36,000
(6000*(53-47)
AFS-Castle co
$2,750
To Unrealized holding gain or loss
(1100*(36-33.50)
$2,750
Unrealized holding gain or loss
$21,000
To AFS- McGrath
(5,250*4)
$21,000
AFS-Oakwood
$6,000
To Unrealized holding gain or loss (1000*6)
$6,000
Trading securities –Anderson con
$22,500
To Unrealized holding gain or loss
(4500*5) – income statement
$22,500
Unrealized gain or loss (income statement)
$144,000
To trading securities – Munter ltd(12,000*12)
$144,000
AFS- King company preferred Stock
198,000
To unrealized holding gain or loss - OCI
198,000
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