3The Collier Company has the following portfolio of equity investments: Company

Question

3The Collier Company has the following portfolio of equity investments: Company name Market 20XI Market 20X2 $28,000 $16,000 Cooper common stock $23,000 $17,000 $44,000 $26.000 $19,000 $37,000 Turner common stock In 20X2 the Turner common stock was sold for $48,000 Using the attached journal sheet record the following journal entries. Identify the type of account that is being debited or credited for all of the journal entries. ( Points) (Skip one line between each journal entry) A) Record the investment as one total journal entry. B) Record adjusting entry for 20XI to reflect the market price of the stock assuming the securities are considered trading securities. C) Record adjusting entry for 20XI to reflect the market price of the stock assuming the securities are considered available for sale securities.

Explanation / Answer

Books of Collier Company

Journal Entries

A) Record

Investment A/C Dr. 84,000

To Bank A/c 84,000

(Being Investment made in commion stock)

B)Adjusting entry for 20X1 assuming trading securities

Unrealised Loss on Investment A/c Dr 2,000

To Investment A/C 2,000

(Being trading securities investments adjusted with market price)

C) Adjusting Entry Assuming available for sale securities

Loss on Available for sales securities Dr 2,000

To Investment A/c 2,000

(Being available for sale investment adjusted)

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