Fair values at December 31 are B, $84,300; C, $604,800; X, $100,000; and Z, $288,000. Required: 1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities. 2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities. Complete this question by entering your answers in the tabs below.
Fair values at December 31 are B, $84,300; C, $604,800; X, $100,000; and Z, $288,000. Required: 1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities. 2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities. Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following.
Available-for-Sale Securities
Fair Value
Company A bonds
$ 495,000
Cost
$530,700
159, 250
661,000
Company B notes
Company C bonds
151,000
647,710
Stoll enters into the following transactions involving its available-for-sale debt securities this year.
January 29 Sold one-half of the Company B notes for $78,000.
July 6 Purchased Company X bonds for $123,600.
November 13 Purchased Company Z notes for $267,900.
December 9 Sold all of the Company A bonds for $518,300.
Fair values at December 31 are B, $84,300; C, $604,800, X, $100,000; and Z, $288,000.
Required:
1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment
for the long-term investments in available-for-sale securities.
2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities.
*
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for
the long-term investments in available-for-sale securities.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9de62490-29a1-4126-ad53-0c4c5fc3af72%2F29f5e0db-8948-4cbf-8f0a-247af321d7d5%2Fsq6ezrr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following.
Available-for-Sale Securities
Fair Value
Company A bonds
$ 495,000
Cost
$530,700
159, 250
661,000
Company B notes
Company C bonds
151,000
647,710
Stoll enters into the following transactions involving its available-for-sale debt securities this year.
January 29 Sold one-half of the Company B notes for $78,000.
July 6 Purchased Company X bonds for $123,600.
November 13 Purchased Company Z notes for $267,900.
December 9 Sold all of the Company A bonds for $518,300.
Fair values at December 31 are B, $84,300; C, $604,800, X, $100,000; and Z, $288,000.
Required:
1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment
for the long-term investments in available-for-sale securities.
2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities.
*
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for
the long-term investments in available-for-sale securities.
Expert Solution
Step 1++
Long term Investment - Available for Sale
A long-term investment that is available for sale is one where the investor buys assets with the intention of holding them for a long time, often more than a year, and has the flexibility to sell them whenever the market is favourable.
Since these investments are not held for trade or to be held until maturity, they are categorized as available-for-sale investments. Instead, the investor keeps them in order to earn returns on investment, which could come in the form of dividends, interest, or an increase in the market value of the assets.
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