Do not give solution in image At December 31 of the prior year, the portfolio of investments in equity securities measured at FV-NI held byAthletes Inc. was as follows.Investment SecurityBadger Common StockSpartan Common StockWildcat Common StockTotalFairValue$39,50051,00023,500$115,000 $114,000Shares Cost1,000 $40,0001,600 50,000500 25,000Unrealized HoldingGain (Loss)$-5001,000-1,500$-1,000In the current year on June 1, Athletes Inc. sold 400 shares of Spartan stock for $33 per share and 100 shares ofWildcat stock for $55 per share. Athletes Inc. purchased 400 shares of Gopher common stock for $35 per share onAugust 1. The fair value of the remaining stock held on December 31 is as follows: Badger common stock,$42,000; Spartan common stock, $36,000; Wildcat common stock, $20,800; and Gopher common stock, $14,400.a. Prepare the entry for (1) the sale of Spartan and (2) Wildcat common stock on June 1. Prior to recording thesale, update the investments to fair value. Eliminate the associated Fair Value Adjustment balances upon sale ofthe investments.b. Record the purchase of Gopher common stock on August 1.c. Prepare any adjusting entry needed on December 31 of the current year. Date(a1) June 1(a2) June 1(b) Aug. 1(c) Dec. 31Account NameUnrealized Gain or Loss-IncomeFair Value Adjustment-TSTo adjust investments being sold to fair value.CashFair Value Adjustment-TSInvestment in TSTo record the sale of investments.Fair Value Adjustment-TSGain on Sale of InvestmentTo record the purchase of investments.Unrealized Gain or Loss-IncomeFair Value Adjustment-TSTo record year-end adjusting entry.>>>>Debit45000000000Credit0x450 X0x0 x0 x0x0x0x0x

A way of accounting for investments in equity securities is fair value - net income (FV-NI).…

a. Prepare the entry for (1) the sale of Spartan and (2) Wildcat common stock on June 1. Prior to recording the sale, update the investments to fair value. Eliminate the associated Fair Value Adjustment balances upon sale of the investments. b. Record the purchase of Gopher common stock on August 1. c. Prepare any adjusting entry needed on December 31 of the current year.

a. Prepare the entry for (1) the sale of Spartan and (2) Wildcat common stock on June 1. Prior to recording the sale, update the investments to fair value. Eliminate the associated Fair Value Adjustment balances upon sale of the investments. b. Record the purchase of Gopher common stock on August 1. c. Prepare any adjusting entry needed on December 31 of the current year.

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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