Exponential Corporation purchased 1000 shares of Mighty R Corporation for its sh

Question

Exponential Corporation purchased 1000 shares of Mighty R Corporation for its short term marketable securities account on March 1, 2016 for $60 per share, paying a commission of $15. On June 30, 2016 Exponential sold 100 shares for $65 per share with a commission of $7 dollars. At December 31, 2016, the end of Exponential Corporation’s fiscal year, the shares of Mighty R Corporation had a market value of $50 per share. What entries should Exponential Corporation make to reflect the situation with respect to its marketable securities accounts for A) March 1; B) June 30 and C0 December 31.

Explanation / Answer

A) Marketable Securities A/c Dr $60,000

Commission on Marketable Securities Dr $15,000

To Cash A/c Cr $75,000

(Being securities purchased and commission paid on purchase of securities)

B) Cash A/c Dr $6,500

To Marketable Securities A/c Cr $6,500

(Being securities sold)

Commission on Marketable Securities Dr $700

To Cash A/c Cr $700

(Being commission paid on sale of securities)

C) Unrealised holding loss Dr $9,000

To Marketable Securities Cr $9,000

(Recording securities at fair market value)

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