The investments of Charger Inc. include a single investment: 11,000 shares of Ra
ID: 341697 • Letter: T
Question
The investments of Charger Inc. include a single investment: 11,000 shares of Raiders Inc. common stock purchased on February 24, 2016, for $37 per share including brokerage commission. These shares were classified as trading securities. As of the December 31, 2016, balance sheet date, the share price had increased to $45 per share.
Required:
Chart of Accounts
Journal
A. Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, 2016. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
1
2
3
Adjusting Entries
4
5
Final Question
B. How is the unrealized gain or loss for trading investments reported on the financial statements?
The unrealized gain or unrealized loss for trading investments is disclosed in the (or a separate item if significant). In determining net income, unrealized losses and gains would be in determining net income.
A. Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, 2016. Refer to the Chart of Accounts for exact wording of account titles. B. How is the unrealized gain or loss for trading investments reported on the financial statements?Explanation / Answer
Answer
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
Working
1
24-Feb-16
Investments-raiders Inc Stock
$407000
11000 x $37
2
Cash
$407000
(Investment purchased)
3
4
31-Dec-16
Investments-raiders Inc Stock
$88000
11000 x ($45 - $37)
5
Unrealized Gain on trading investments
$88000
(investment recorded at fair value)
The unrealized gain for trading investments is disclosed in the INCOME STATEMENT (or a separate item if significant). In determining net income, unrealized gains would be ADDED in determining net income.
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
Working
1
24-Feb-16
Investments-raiders Inc Stock
$407000
11000 x $37
2
Cash
$407000
(Investment purchased)
3
4
31-Dec-16
Investments-raiders Inc Stock
$88000
11000 x ($45 - $37)
5
Unrealized Gain on trading investments
$88000
(investment recorded at fair value)
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