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1. Prepare the journal entry to record the acquisition of the investment in year 1. 2. Prepare the journal entry to adjust the portfolio to fair value at the end of year 1. 3. Prepare the journal entry to record the sale of the Dot Corporation common shares.

1. Prepare the journal entry to record the acquisition of the investment in year 1. 2. Prepare the journal entry to adjust the portfolio to fair value at the end of year 1. 3. Prepare the journal entry to record the sale of the Dot Corporation common shares.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ủo 2 AAA Company has the following securities in its trading portfolio on December 31 of year 1. All securities are purchased during year 1: Description Cost Fair Value Dolt Corporation common stock: 15,000 shares $ 259,500 $ 345,000 Single JA common stock: 200,000 shares 1,800,000 1,000,000 Portfolio Totals $ 2,059,500 $1,345,000 AAA acquired and sold securities from this portfolio during year 2. Specifically, on June 3, the company sold 7,500 shares of Dolt Corporation stock for $16 per share. On November 9, AAA acquired 4,000 shares of FOAH Stores 'common stock for $86 per share. The AAA Company portfolio of trading equity securities on December 31 of year 2 is presented below. Description Cost Fair Value Dolt Corporation common stock: 7,500 shares $ 129,750 $ 172,500 Single JA common stock: 200,000 shares 1,800,000 1,000,000 FOAH common stock: 4,000 shares 344,000 324,000 Portfolio Totals $ 2,273,750 $1,496,500 Instruction: 1. Prepare the journat entry to record the acquisition of the investment in year 1. 2. Prepare the journal entry to adjust the portfolio to fair value at the end of year 1. 3. Prepare the journal entry to record the sale of the Dot Corporation common shares. 4. Prepare the journal entry to record the acquisition of the FOAH common stock. 5. Prepare the journal entry to adjust the portfolio to fair value at the end of year 2.
Transcribed Image Text:ủo 2 AAA Company has the following securities in its trading portfolio on December 31 of year 1. All securities are purchased during year 1: Description Cost Fair Value Dolt Corporation common stock: 15,000 shares $ 259,500 $ 345,000 Single JA common stock: 200,000 shares 1,800,000 1,000,000 Portfolio Totals $ 2,059,500 $1,345,000 AAA acquired and sold securities from this portfolio during year 2. Specifically, on June 3, the company sold 7,500 shares of Dolt Corporation stock for $16 per share. On November 9, AAA acquired 4,000 shares of FOAH Stores 'common stock for $86 per share. The AAA Company portfolio of trading equity securities on December 31 of year 2 is presented below. Description Cost Fair Value Dolt Corporation common stock: 7,500 shares $ 129,750 $ 172,500 Single JA common stock: 200,000 shares 1,800,000 1,000,000 FOAH common stock: 4,000 shares 344,000 324,000 Portfolio Totals $ 2,273,750 $1,496,500 Instruction: 1. Prepare the journat entry to record the acquisition of the investment in year 1. 2. Prepare the journal entry to adjust the portfolio to fair value at the end of year 1. 3. Prepare the journal entry to record the sale of the Dot Corporation common shares. 4. Prepare the journal entry to record the acquisition of the FOAH common stock. 5. Prepare the journal entry to adjust the portfolio to fair value at the end of year 2.
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