ate.edu/bbcswebdav/pid-5745132-dt-content-rid-30848606_ 1/courses/ACC302-S Probl

Question

ate.edu/bbcswebdav/pid-5745132-dt-content-rid-30848606_ 1/courses/ACC302-S Problems (45 points) Show work for full and partial credit. 1. (20 points) Pfizer Co. had the following Investment in Trading Securities at December 31, 2016. This was the first year Pfizer ever invested in trading securities Investment in Trading Securities Terra Firma Corp., 500 shares common stock Alva-Med, Inc., 1,800 shares common stock Test Assist Labs, Inc, 1,400 shares common98.00095,400 Total Cost $10,200 27,000 Fair Market Value $10,700 28,000 Total $134,100 a) Make the adjusting journal entry at December 31, 2016 b) Make journal entries for the following transactions that occurred in 2017. Jan. 15 Purchased 1,000 shares of Dermasol, Inc. at $18 per share, with broker fees of $300. Aug. 21 Sold all of the Terra Firma Corp. for $25 per share, with broker fees of $400. Dec. 31, 2017 Fair market values were as follows. Make the year-end adjusting journal entry Investment in Trading Securities Alva-Med, Inc., 1,800 shares common stock Test-Assist Labs, Inc, 1,400 shares common Dermasol, Inc., 1,000 shares of common Total Cost 27,000 98,000 Fair Market Value 29,000 98,400 20,000 Total s 7 147.400

Explanation / Answer

a. Adjustment entry at December 31, 2016 Date Account Title Debit Credit Dec.31,2016 Unrealized gain/loss on trading securities 1100 Trading securities market value adjustment 1100 Entries recorded in 2017 Reversal of the adjustment entry dated Dec.31,2016 Date Account Title Debit Credit Jan.1,2017 Trading securities market value adjustment 1100 Unrealized gain/loss on trading securities 1100 b. 1.Purchase of 1,000 shares of Dermasol Inc. Date Account Title Debit Credit Jan.15,2017 Trading Securities 18300 Cash 18300 2. Sale of Terra Firma Corp. Sahres - 500 @$25 per share with $400 broker fee Date Account Title Debit Credit Jan.15,2017 Cash 12100 Gain on sale of securities 1900 Trading securities 10200 Adjustment entry dated Dec.31,2017 Date Account Title Debit Credit Dec.31,2017 Trading securities market value adjustment 4100 Unrealized gain/loss on trading securities 4100 Working: Dec.31 balances Total cost FMV Alva-Med Inc. 1,800 shares of common stock 27000 29000 Test-Assist Lab Inc.1,400 shares common stc. 98000 98400 Dermasol Inc. 1,000 shares of common stock 18300 20000 Total 143300 147400

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