Midwest Bank invests in equity securities. At the beginning of December 2019, the bank held no equity securities. During December of 2019, it entered into the following transactions: Dec. 10 Purchased 600 shares of Carroll Company common stock for $75 per share. Dec. 21 Purchased 700 shares of Dynamo Company common stock for $34 per share. At the end of December, the Carroll Company common stock had a quoted market price of $78 per share, and the Dynamo Company common stock had a quoted market price of $33 per share. Required: 1. Prepare journal entries to record the preceding information. 2. What is the unrealized holding gain or loss, and where is it reported in the 2019 financial statements? 3. Show how the bank reports the equity securities on its December 31, 2019, balance sheet.
Midwest Bank invests in equity securities. At the beginning of December 2019, the bank held no equity securities. During December of 2019, it entered into the following transactions: Dec. 10 Purchased 600 shares of Carroll Company common stock for $75 per share. Dec. 21 Purchased 700 shares of Dynamo Company common stock for $34 per share. At the end of December, the Carroll Company common stock had a quoted market price of $78 per share, and the Dynamo Company common stock had a quoted market price of $33 per share. Required: 1. Prepare journal entries to record the preceding information. 2. What is the unrealized holding gain or loss, and where is it reported in the 2019 financial statements? 3. Show how the bank reports the equity securities on its December 31, 2019, balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Midwest Bank invests in equity securities. At the beginning of December 2019, the bank held no equity securities. During December of 2019, it entered into the following transactions:
| Dec. 10 | Purchased 600 shares of Carroll Company common stock for $75 per share. |
| Dec. 21 | Purchased 700 shares of Dynamo Company common stock for $34 per share. |
At the end of December, the Carroll Company common stock had a quoted market price of $78 per share, and the Dynamo Company common stock had a quoted market price of $33 per share.
Required:
| 1. | Prepare |
| 2. | What is the unrealized holding gain or loss, and where is it reported in the 2019 financial statements? |
| 3. | Show how the bank reports the equity securities on its December 31, 2019, |
| 4. | Next Level If Midwest uses IFRS, how would the accounting be different from U.S. GAAP? |
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