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On December 21, 2020, Martinez Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $20,400 $19,300 $(1,100 ) Colorado Co. stock 10,900 9,800 (1,100 ) Buffaloes Co. stock 20,400 20,990 590 Total of portfolio $51,700 $50,090 (1,610 ) Previous fair value adjustment balance Fair value adjustment-Cr. $(1,610 ) During 2021, Colorado Co. stock was sold for $10,350. The fair value of the stock on December 31, 2021, was Clemson Corp. stock- $19,390; Buffaloes Co. stock-$20,900. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31, 2021.

On December 21, 2020, Martinez Company provided you with the following information regarding its equity investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $20,400 $19,300 $(1,100 ) Colorado Co. stock 10,900 9,800 (1,100 ) Buffaloes Co. stock 20,400 20,990 590 Total of portfolio $51,700 $50,090 (1,610 ) Previous fair value adjustment balance Fair value adjustment-Cr. $(1,610 ) During 2021, Colorado Co. stock was sold for $10,350. The fair value of the stock on December 31, 2021, was Clemson Corp. stock- $19,390; Buffaloes Co. stock-$20,900. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31, 2021.

FINANCIAL ACCOUNTING
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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**Equity Investments Analysis for Martinez Company as of December 21, 2020** Martinez Company has provided the following details regarding its trading investments in equities as of December 31, 2020: | Investments (Trading) | Cost | Fair Value | Unrealized Gain (Loss) | |-----------------------|---------|------------|------------------------| | Clemson Corp. stock | $20,400 | $19,300 | $(1,100) | | Colorado Co. stock | $10,900 | $9,800 | $(1,100) | | Buffaloes Co. stock | $20,400 | $20,990 | $590 | | **Total of portfolio**| **$51,700** | **$50,090** | **$(1,610)** | - **Previous fair value adjustment balance**: $0 - **Fair value adjustment—Credit**: $(1,610) During 2021, the following activities occurred: - **Sale of Colorado Co. stock**: Sold for $10,350. - **Fair Values on December 31, 2021**: - Clemson Corp. stock: $19,390 - Buffaloes Co. stock: $20,900 None of the investments provide a significant influence over the companies. **Tasks:** (a) **Prepare the adjusting journal entry needed on December 31, 2020.** (b) **Prepare the journal entry to record the sale of Colorado Co. stock during 2021.** (c) **Prepare the adjusting journal entry needed on December 31, 2021.** This information is crucial for educational purposes, particularly in accounting studies, where understanding investment adjustments and their impact on financial statements is key.
Transcribed Image Text:**Equity Investments Analysis for Martinez Company as of December 21, 2020** Martinez Company has provided the following details regarding its trading investments in equities as of December 31, 2020: | Investments (Trading) | Cost | Fair Value | Unrealized Gain (Loss) | |-----------------------|---------|------------|------------------------| | Clemson Corp. stock | $20,400 | $19,300 | $(1,100) | | Colorado Co. stock | $10,900 | $9,800 | $(1,100) | | Buffaloes Co. stock | $20,400 | $20,990 | $590 | | **Total of portfolio**| **$51,700** | **$50,090** | **$(1,610)** | - **Previous fair value adjustment balance**: $0 - **Fair value adjustment—Credit**: $(1,610) During 2021, the following activities occurred: - **Sale of Colorado Co. stock**: Sold for $10,350. - **Fair Values on December 31, 2021**: - Clemson Corp. stock: $19,390 - Buffaloes Co. stock: $20,900 None of the investments provide a significant influence over the companies. **Tasks:** (a) **Prepare the adjusting journal entry needed on December 31, 2020.** (b) **Prepare the journal entry to record the sale of Colorado Co. stock during 2021.** (c) **Prepare the adjusting journal entry needed on December 31, 2021.** This information is crucial for educational purposes, particularly in accounting studies, where understanding investment adjustments and their impact on financial statements is key.
### Accounting Entry Template **Instructions:** - Credit account titles are automatically indented when the amount is entered. - Do not indent manually. - If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. #### Journal Entry Template | No. | Account Titles and Explanation | Debit | Credit | |-----|--------------------------------|-------|--------| | (a) | | | | | | | | | | (b) | | | | | | | | | | (c) | | | | | | | | | This template is designed to assist with recording accounting transactions by providing structured fields for account titles, explanations, and corresponding debit and credit amounts. Each entry is separated for clarity, allowing for multiple transactions to be recorded within one document.
Transcribed Image Text:### Accounting Entry Template **Instructions:** - Credit account titles are automatically indented when the amount is entered. - Do not indent manually. - If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. #### Journal Entry Template | No. | Account Titles and Explanation | Debit | Credit | |-----|--------------------------------|-------|--------| | (a) | | | | | | | | | | (b) | | | | | | | | | | (c) | | | | | | | | | This template is designed to assist with recording accounting transactions by providing structured fields for account titles, explanations, and corresponding debit and credit amounts. Each entry is separated for clarity, allowing for multiple transactions to be recorded within one document.
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