At December 31, 2014, Realife Industries\' portfolio of investments in available
ID: 2758083 • Letter: A
Question
At December 31, 2014, Realife Industries' portfolio of investments in available-for-sale marketable securities consisted of the following:
(a.) Make the Mark to Market adjustment at December 31, 2014.
(b.) On March 15, 2015, record the following sales of securities:
(1) Sold 5,000 shares of its investment in Crown, Inc., at a price of $20 per share.
(2) Sold 1,000 shares of its investment in Plastic Dots at a price of $45 per share.
(c.) At December 31, 2015, the market values of these stocks are: Crown, $21 per share; Plastic Dots, $42 per share. Complete the schedule showing cost and current market value of securities owned by Realife at the end of 2015.
Current CostMarket Value Crown, Inc. (10,000 shares, cost, $10 per share; Market value $16 per share) 100,000 160,000 c Dots (5,000 shares Market value $47 per share) Plastic Dots (5,000 shares, cost $50 per share, $250,000235,000Explanation / Answer
a) AVAILABLE FOR SALE EQUITY SECURITY PORTFOLIO (December 31, 2014) Investment Cost Fair Value Unrealised gain (loss) Crown Inc - 10000 shares 100000 160000 60000 Plastic Dots - 5000 shares 250000 235000 -15000 Total of portfolio 350000 395000 45000 Previous fair value adjustment balance 0 Fair value adjustment Dr 45000 Entry to be passed Fair value adjustment-available for sale 45000 Unrealized holding gain or Loss-Equity 45000 b) Cash 100000 Equity Investments 50000 Gain on sale of investments 50000 (sale of 5000 Crown Inc shares) Cash 45000 Loss on Sale of Investments 5000 Equity Investments 50000 (sale of 1000 shares of Plastic Dots) c) AVAILABLE FOR SALE EQUITY SECURITY PORTFOLIO (December 31, 2015) Investment Cost Fair Value Unrealised gain (loss) Crown Inc - 5000 shares 50000 105000 55000 Plastic Dots - 4000 shares 200000 168000 -32000 Total of portfolio 250000 273000 23000 Previous fair value adjustment balance Dr 45000 Fair value adjustment Cr 22000 Journal Entry Unrealized Holding Gain or Loss-Equity 22000 Fair Value adjustment-available for sale 22000
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