(Equity Securities Entries) McElroy Company has the following portfolio of investment securities at September 30, 2020, its most recent reporting date. investment Securities Cost Fair Value Horton, Inc. common (5,000 shares) $215,000 $200,000 Monty, Inc. preferred (3,500 shares) 133,000 140,000 Oakwood Corp. common (1,000 shares) 180,000 179,000 On October 10, 2020, the Horton shares were sold at a price of $54 per share. In addition, 3,00 shares of Patriot common stock were acquired at S54.50 per share on November 2, 2020. The Decembe 31, 2020, fair values were Monty $106,000, Patriot $132,000, and Oakwood $193,000. Instructions Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2020.

(Equity Securities Entries) McElroy Company has the following portfolio of investment securities at September 30, 2020, its most recent reporting date. investment Securities Cost Fair Value Horton, Inc. common (5,000 shares) $215,000 $200,000 Monty, Inc. preferred (3,500 shares) 133,000 140,000 Oakwood Corp. common (1,000 shares) 180,000 179,000 On October 10, 2020, the Horton shares were sold at a price of $54 per share. In addition, 3,00 shares of Patriot common stock were acquired at S54.50 per share on November 2, 2020. The Decembe 31, 2020, fair values were Monty $106,000, Patriot $132,000, and Oakwood $193,000. Instructions Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2020.

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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Splish Corporation has outstanding 2,200 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2020, when the unamortized discount is $24,000 and the market price of the stock is $21 per share.Record the conversion using the book value approach.
On December 21, 2020, Grouper Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $21,600 $20,700 $(900 ) Colorado Co. stock 10,700 9,600 (1,100 ) Buffaloes Co. stock 21,600 22,200 600 Total of portfolio $53,900 $52,500 (1,400 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,400 ) During 2021, Colorado Co. stock was sold for $10,140. The fair value of the stock on December 31, 2021, was Clemson Corp. stock—$20,790; Buffaloes Co. stock—$22,110. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31,…
During 2020, Maria Company purchased trading securities with the following cost and market value on December 31, 2020: Security Cost Market Value A - 1,000 shares 200,000 300,000 B - 10,000 shares 1,700,000 1,600,000 C - 20,000 shares 3,100,000 2,900,000 5,000,000 4,800,000 The entity sold 10,000 shares of Security B on January 27, 2021, for P150 per share. What amount should be reported as gain or loss on sale of trading investment in 2021?
SLC Corp. has the following portfolio of securities acquired for trading purposes and accounted for using the FV-NI model. SLC Inc. prepares financial statements every quarter. At Sept 30, 2021, the end of the company’s third quarter, the following information was reported: Investment Cost Fair Value 50,000 Common Shares – Seneca Inc. $215,000 $200,000 3,500 Preferred Shares – Loyalist Inc. $135,000 $140,000 2,000 Common Shares – Algonquin Inc. $180,000 $179,000 Transactions that occurred in the fourth quarter: Oct 8, 2021 The Seneca Shares were sold for $4.30 per share Nov 16, 2021 3,000 common shares of Humber Inc. were purchased at $44.50 per share SLC Inc. pays a 1% commission on purchase and sales of all securities. At the end of the fourth quarter, on December 31, 2021, the fair value of the shares were as follows: Investment Fair Value Loyalist Inc. $106,000 Algonquin Inc. $203,000 Humber Inc. $122,000 Instructions: Prepare the journal entries to record the sale, purchase and…
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On December 31, 2020, Dreamer Company reported as Available-for-sale securities: AT Company, 5,000 shares of common stock (a 1% interest) P 125,000 ITS Company, 10,000 shares of common stock (a 2% interest) 160,000 Two Company, 25,000 shares of common stock (a 10% interest) 700,000 Marketable equity securities, at cost P 985,000 Less: Valuation allowance 50,000 Marketable equity securities, at market P 935,000 Additional information: · On May, 2021, AT Company issued a 10% stock dividend when the market price of its stock was P24 per share. · On November 1, 2021, AT Company paid a cash dividend of P0.75 per share. · On August 5, 2021, ITS Company issued to all shareholders, stock rights on the basis of one right per share. Market prices at date of issue were P13.50 per share (ex-right) of stock and P1.50 per rights. Dreamer Company sold all rights on December 16, 2021 for net proceeds of P18,800. · On July 1, 2021, Dreamer Company paid P1,520,000 for 50,000 additional shares of Two…
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Vaughn Corporation has outstanding 2,200 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2020, when the unamortized discount is $34,400 and the market price of the stock is $21 per share.Record the conversion using the book value approach.
Larkspur Company has the following securities in its investment portfolio on December 31, 2020 (all securities were purchased in 2020): (1) 2,800 shares of Anderson Co. common stock which cost $50,400, (2) 10,800 shares of Munter Ltd. common stock which cost $604,800, and (3) 6,300 shares of King Company preferred stock which cost $270,900. The Fair Value Adjustment account shows a credit of $10,400 at the end of 2020. In 2021, Larkspur completed the following securities transactions. 1. On January 15, sold 2,800 shares of Anderson's common stock at $20 per share less fees of $2,160. 2. On April 17, purchased 900 shares of Castle's common stock at $33 per share plus fees of $2,030. On December 31, 2021, the market prices per share of these securities were Munter $65, King $40, and Castle $25. In addition, the accounting supervisor of Larkspur told you that, even though all these securities have readily determinable fair values, Larkspur will not actively trade these securities because…
On December 21, 2020, Sweet Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $19,300 $18,200 $(1,100 ) Colorado Co. stock 10,400 9,400 (1,000 ) Buffaloes Co. stock 19,300 19,930 630 Total of portfolio $49,000 $47,530 (1,470 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,470 ) During 2021, Colorado Co. stock was sold for $9,910. The fair value of the stock on December 31, 2021, was Clemson Corp. stock—$18,310; Buffaloes Co. stock—$19,830. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31,…