provide correct answer of this General accounting question Goofy, Inc., bought 15,000 shares of Crazy Co.'s stock for $150,000on May 5, 2010, and classified the stock as available for sale. Themarket value of the stock declined to $118,000 by December 31,2010. Goofy reclassified this investment as trading securities inDecember of 2011 when the market value had risen to $125,000.What effect on 2011 income should be reported by Goofy for theCrazy Co. shares?A. $0B. $7,000 net gainC. $25,000 net lossD. $32,000 net loss

Step 1: Define Trading securitiesCompanies will only invest if they think there is a good chance…

Answered: Goofy, Inc., bought 15,000 shares of…

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

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Key Company purchased 800 shares of Franklin Company stock at a total cost of $ 7,560 on 2010 July 1. At the end of the accounting year (2010 December 31), the market value for these shares was $ 7,360. By 2011 December 31, the market value had risen to $ 7,770. This stock is the only marketable equity security that Key Company owns. The company classifies the securities as available for sale securities. Give the entries necessary at the date of purchase and at 2010 December 31, and 2011.
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Targett Company had no short-term investments prior to the year 2017. It had the following transactions involving short-term investments in available-for-sale securities during 2017. Required: Prepare journal entries to record the preceding transactions and events. Prepare a table to compare the year-end cost and fair values of Targett’s short-term investments in available-for-sale securities. The year-end fair values per share are: Gem Co., $26.50, PepsiCo, $46.50; and Xerox, $13.75. (hint Cost=$164,220) Prepare an adjusting entry, if necessary, to record the year-end fair value adjustment for the portfolio of short-term investments in the available-for-sale securities. (hint Dr. Unrealized Loss-Equity $4,470) How do these short-term investments affect Targett’s (a) income statement for year 2017 and (b) the equity section of its balance sheet at year-end 2017?
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Hardstone Inc. had excess cash and invested it in the stock of Softrock, Inc. On August 5, 2021 Hardstone bought 7,000 shares of Softrock at $12 per share. On September 30, 2021, Softrock paid a cash dividend of $1 per share. On December 31, 2021, the stock had decreased in value to $10 per share. Which of the following would be included in the journal entry for December 31, 2021? No entry required Debit to Trading Securities: $14,000 Debit to Unrealized Loss on Investments: $14,000 Credit to Cash: $7,000 Credit to Dividend Revenue: $7,000
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During 2024, R2D2 Company purchased 10,000 shares of Goliath, Inc. for $30 per share and classified it as a trading security. During the year, R2D2 Company sold 2,500 shares of Goliath for $35 per share. At December 31, 2024, the market price of Goliath’s stock was $28 per share. What is the unrealized gain/(loss) that R2D2 will report in its income statement for the year ended December 31, 2024 for the investment in Goliath stock?
On January 1, 2017, Richards Inc. had cash and common stock of $60,000. At that date, the company had no other asset, liability, or equity balances. On January 2, 2017, it purchased for cash $20,000 of debt securities that it classified as available-for-sale. It received interest of $3,000 during the year on these securities. In addition, it has an unrealized holding gainon these securities of $4,000 net of tax. Determine the following amounts for 2017: (a) net income, (b) comprehensive income,(c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2017).

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