Rose Company had no short-term investments prior to year 2017. It had the follow
ID: 2543354 • Letter: R
Question
Rose Company had no short-term investments prior to year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017.
Prepare a table to compare the year-end cost and fair values of Rose's short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $27.25; PepsiCo, $46.25; and Xerox, $12.00.
Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in available-for-sale securities. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the year-end adjusting entry for the securities portfolio as of December 31, 2017.
Note: Enter debits before credits.
Explanation / Answer
SOLUTION
Comparison of Cost and Fair Values for AFS Portfolio-
125,200 [(5,000*$25)+200]
Journal Entry
Cost ($) Fair value ($) Unrealized amount ($) Gem Co.125,200 [(5,000*$25)+200]
136,250 (5,000*27.25) 11,050 Pepsi Co. 245,370 [(5,000*$49)+370] 231,250 (5,000*46.25) (14,121) Xerox Co. $37,950 [(2,500*$15)+450] 30,000 (2,500*$12) (7,950) Total (11,021)Related Questions
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