Ophir Investments Inc. is a regional investment company that began operations on

Question

Ophir Investments Inc. is a regional investment company that began operations on January 1, 2014. The following transactions relate to trading securities acquired by Ophir Investments Inc., which has a fiscal year ending on December 31:

2014

Required:

1. Journalize the entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar.

Feb. 3. Purchased 2,200 shares of Mapco Inc. as a trading security at $27 per share plus a brokerage commission of $440. Mar. 23. Purchased 1,100 shares of Swift Inc. as a trading security at $11 per share plus a brokerage commission of $220. May 19. Sold 500 shares of Mapco Inc. for $28 per share less an $70 brokerage commission. June 12. Received an annual dividend of $0.15 per share on Mapco stock. Dec. 31. The portfolio of trading securities was adjusted to fair values of $31 and $12 per share for Mapco Inc. and Swift Inc., respectively. 2015 Apr. 9. Purchased 1,000 shares of Corvair Inc. as a trading security at $32 per share plus a $150 brokerage commission. June 15. Received an annual dividend of $0.18 per share on Mapco Inc. stock. Aug. 30. Sold 200 shares of Corvair Inc. for $26 per share less a $60 brokerage commission. Dec. 31. The portfolio of trading securities had a cost of $84,280 and fair value of $81,200, requiring a credit balance in Valuation Allowance for Trading Investments of $3,080 ($84,280 - $81,200). Thus, the debit balance from December 31, 2014 is to be adjusted to the new balance.

Explanation / Answer

Journal Entries in the books of Ophir Investment Inc.

2015

DAte Particulars Amount($) Amount($) Feb 3 Trading Securities A/c DR 59840 To CAsh CR 59840 (Being Trading Securities Purchased from Mapco inc .=2200x27+440. Including Brokerage Commission MArch 23 Trading Securities A/c DR 12320 To Cash CR 12320 (Being Trading Securities Purchased from Swift Inc .=1100x11+220)Including brokerage Commission MAy 19 CAsh A/c 13930 To Trading Securities A/c 13500 To Gain on sale of Trading Securities 430 (Being 500 shares of Mapco Inc sold deducting commission of $70 and gain on sale realised) june 12 CAsh A/c DR 255 To Dividend Receivable A/c CR 255 (Being Dividend received on Mapco Stock = 2200-500 = 1700x0.15 = 255) Dec31 Trading Securities A/c 7900 To Unrealised GAin on TRading Securities 7900 (Trading securities adjusted to fair value)

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