RBG Corp purchased 150 shares of MLK stock during the year for a total of $23,250. RBG Corpowns 18% of the outstanding stock of MLK. RBG Corp plans to use the stock for tradingpurposes and will not hold onto these shares for very long. On December 31, 20X1, each sharewas worth $157 (i.e. market value).а.Record the appropriate journal entry on December 31, 20X1.b. Where on the financial statements are these values recorded?

Answered: а. Record the appropriate journal entry…

а. Record the appropriate journal entry on December 31, 20X1. b. Where on the financial statements are these values recorded?

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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Question

RBG Corp purchased 150 shares of MLK stock during the year for a total of $23,250. RBG Corp
owns 18% of the outstanding stock of MLK. RBG Corp plans to use the stock for trading
purposes and will not hold onto these shares for very long. On December 31, 20X1, each share
was worth $157 (i.e. market value).
а.
Record the appropriate journal entry on December 31, 20X1.
b. Where on the financial statements are these values recorded?

Expert Solution

Step 1

Mark to market accounting is made to ensure that the financial statement consists of true amounts. The resultant gain or loss is reported as unrealized income or loss in the income statement.

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