Fair Value Journal Entries, Available-for-Sale Investments Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations: Name Number of Shares Total Cost Dust Devil, Inc. 1,400 $39,480 Gale Co. 200 14,220 Whirlwind Co. 2,100 67,200 Total $120,900 The market price per share for the available-for-sale security portfolio on December 31, Year 1 was as follows: Market Price per Share Dec. 31, Year 1

Fair Value Journal Entries, Available-for-Sale Investments Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations: Name Number of Shares Total Cost Dust Devil, Inc. 1,400 $39,480 Gale Co. 200 14,220 Whirlwind Co. 2,100 67,200 Total $120,900 The market price per share for the available-for-sale security portfolio on December 31, Year 1 was as follows: Market Price per Share Dec. 31, Year 1

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

options for a:

Available-for-sale Investments, at cost
cash
Retained Earnings
Unrealized gain(loss) on available-for-sale Investments
Valuation Allowance for available-for-sale Investments

options for b

first slot is yes or no

Second slot is as other revenue/expense or in the stockholder equity section

Fair Value Journal Entries, Available-for-Sale Investments
Storm, Inc. purchased the following available-for-sale securities during Year 1, its first year of operations:
Name
Number of Shares Total Cost
Dust Devil, Inc.
1,400
$39,480
Gale Co.
200
14,220
Whirlwind Co.
2,100
67,200
Total
$120,900
The market price per share for the available-for-sale security portfolio on December 31, Year 1 was as follows:
Market Price per Share
Dec. 31, Year 1
Dust Devil, Inc
$19.5
Gale Co.
77.5
Whirlwind Co.
31
a. Provide the journal entry to adjust the available-for-sale security portfolio to fair value on December 31, Year 1.
Year 1, Dec. 31 Available-for-Sale Investments, at cost
b. Is there any impact of December 31, Year 1 journal entry on the income statement?
any unrealized gain/loss is reported
of the
balance sheet
income statement

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

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