5 Carlsville Company, which began operations in 2017, invests its idle cash in t

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5 Carlsville Company, which began operations in 2017, invests its idle cash in trading securities. The following transactions are from its short-term investments in trading securities 2017 an. 28 Purchased 800 shares of Ford Motor Co. at $28 per share plus a $125 commission Feb. 9 Purchased 2,900 shares of Lucent at $31 per share plus a $280 commission. Oct. 12 Purchased 728 shares of 2-Seven at $7.68 per share plus a $9s commission. Dec. 31 Fair value of the short-term investments in trading securities is $121, 30. 2018 Apr. 15 Sold 800 shares of Ford Motor Co. at $3e per share less a $290 commission. uly 5 Sold 720 shares of Z-Seven at $10.75 per share less a $95 commission. Duly 22 Purchased 1,800 shares of Hunt Corp. at $39 per share plus a $225 commission. Aug. 19 Purchased 1,600 shares of Donna Karan at $50.00 per share plus a $110 commission. Dec. 31 Fair value of the short-term investments in trading securities is $236,855. 2019 Feb. 27 Purchased 3,700 shares of HCA at $32 per share plus a $420 commission. Mar. 3 Sold 1,800 shares of Hunt at $34 per share less $125 commission une 21 Sold 2,900 shares of Lucent at $28.75 per share less a $42 commission. June 30 Purchased 1,300 shares of Black & Decker at $47.58 per share plus a $595 commission. Nov. 1 Sold 1,600 shares of Donna Karan at $50.00 per share less a $129 commission. Dec. 31 Fair value of the short-term investments in trading securities is $185, 900 Required: Prepare journal entries to record these short-term investment activities for the years shown. On December 31 of each year prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities (If transection/event, select "No journal entry required" in the first occount field. Do not round no entry is required for a your intermediate calculations.) Prey 5 of 5 Next

Explanation / Answer

Requirement 1 Date Accounts Titles Debit Credit January 20, 2017 Short term investment (800 shares x $28) +$125 $22,525 Cash $22,525 Purchased 800 shares of Ford Motor Co. at $28 per share plus a $125 commission. February 9, 2017 Short term investment (2900 shares x $31) +$200 $90,100 Cash $90,100 Purchased 2,900 shares of Lucent at $31 per share plus a $200 commission October 12, 2017 Short term investment (720 shares x $7.60) +$95 $5,567 Cash $5,567 Purchased 720 shares of Z-Seven at $7.60 per share plus a $95 commission. December 31, 2017 Fair Value adjustment-trading $3,108 Unrealised gain ($121,300 - $118,192) $3,108 $22,525 + $90,100 + $5567 = $118,192 Requirement 2 April 15, 2018 Cash (800 x $30 )-$290 $23,710 Short term investment $22,525 Gain on sale of trading securities (difference) $1,185 Sold 800 shares of Ford Motor Co. at $30 per share less a $290 commission. July 15, 2018 Cash (720 x $10.75 )-$95 $7,645 Short term investment $5,567 Gain on sale of trading securities (difference) $2,078 Sold 720 shares of Z-Seven at $10.75 per share less a $95 commission. July 22, 2018 Short term investment (1800 x $39 +225) $70,425 Cash $70,425 Purchased 1,800 shares of Hunt Corp. at $39 per share plus a $225 commission August 19, 2018 Short term investment (1600 x $50 +110) $80,110 Cash $80,110 Purchased 1,600 shares of Donna Karan at $50.00 per share plus a $110 commission. December 31, 2018 Unrealised Loss $3,780 Fair Value adjustment-trading($240,635 - $236,855) $3,780 $70,425 + $80,110 + $90,110 = $240,635 Requirement 3 February 27, 2019 Short term investment (3700 x $32 +420) $118,820 Cash $118,820 Purchased 3,700 shares of HCA at $32 per share plus a $420 commission. March 3, 2019 Cash(1800 x $34 -125) $61,075 Loss on sale of securities $9,350 Short term investment $70,425 Sold 1,800 shares of Hunt at $34 per share less a $125 commission. June 21, 2019 Cash(2900 x $28.75 -42) $83,333 Loss on sale of securities $6,767 Short term investment $90,100 Sold 2,900 shares of Lucent at $28.75 per share less a $42 commission. June 30, 2019 Short term investment (1300 x $47.50)+$595 $62,345 Cash $62,345 Purchased 1,300 shares of Black & Decker at $47.50 per share plus a $595 commission. November 1, 2019 Cash (1600 x$50-$129) $79,871.00 Loss on sale of trading securities $239 Short term investment $80,110 Sold 1,600 shares of Donna Karan at $50.00 per share less a $129 commission. Dec 31,2019 Fair value adjustment-Trading ($185,900 - $62,345 - $118,820) $4,735 Unrealized Gain $4,735

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