Instructions Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on December 31, Year 1, was as follows: 1 2 Tornado Inc. 3 Tsunami Corp. 4 Typhoon Corp. Total 5 Name Number of Shares 770.00 1,210.00 2,140.00 Total Cost $13,552.00 30,129.00 43.870.00 $87,551.00 Total Fair Value $15,169.00 34,485.00 43,228.00 $92,882.00 On June 12, Year 2, Hurricane purchased 1,460 shares of Rogue Wave Inc. at $50 per share plus a $95 brokerage commission. Required: A Provide the journal entries to record the following (refer to the Chart of Accounts for exact wording of account titles): 1. The adjustment of the available-for-sale security portfolio to fair value on December 31, Year 1. 2. The June 12, Year 2, purchase of Rogue Wave Inc. stock. B. How are unrealized gains and losses treated differently for available-for-sale securities than for trading securities? [

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Fair value journal entries, available-for-sale investments
Instructions
1
2 Tornado Inc.
Instructions
Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on December 31, Year 1, was
as follows
Print Item
3
Tsunami Corp.
+ Typhoon Corp.
Total
Chart of Accounts
5
Journal Final Question
Name
Number of Shares
770.00
1,210.00
2,140.00
Check My Work 3 more Check My Work uses remaining.
Total Cost
$13,552.00
30,129.00
43,870.00
$87,551.00
Total Fair Value
$15,169.00
34,485.00
43,228.00
$92.882.00
On June 12, Year 2, Hurricane purchased 1,460 shares of Rogue Wave Inc. at $50 per share plus a $95 brokerage commission.
Required:
A. Provide the journal entries to record the following (refer to the Chart of Accounts for exact wording of account titles):
1. The adjustment of the available-for-sale security portfolio to fair value on December 31, Year 1.
2. The June 12, Year 2, purchase of Rogue Wave Inc. stock.
B. How are unrealized gains and losses treated differently for available-for-sale securities than for trading securities?
Transcribed Image Text:eBook Fair value journal entries, available-for-sale investments Instructions 1 2 Tornado Inc. Instructions Hurricane Inc. purchased a portfolio of available-for-sale securities in Year 1, its first year of operations. The cost and fair value of this portfolio on December 31, Year 1, was as follows Print Item 3 Tsunami Corp. + Typhoon Corp. Total Chart of Accounts 5 Journal Final Question Name Number of Shares 770.00 1,210.00 2,140.00 Check My Work 3 more Check My Work uses remaining. Total Cost $13,552.00 30,129.00 43,870.00 $87,551.00 Total Fair Value $15,169.00 34,485.00 43,228.00 $92.882.00 On June 12, Year 2, Hurricane purchased 1,460 shares of Rogue Wave Inc. at $50 per share plus a $95 brokerage commission. Required: A. Provide the journal entries to record the following (refer to the Chart of Accounts for exact wording of account titles): 1. The adjustment of the available-for-sale security portfolio to fair value on December 31, Year 1. 2. The June 12, Year 2, purchase of Rogue Wave Inc. stock. B. How are unrealized gains and losses treated differently for available-for-sale securities than for trading securities?
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