On December 21, 2020, Zurich Company provided you with the following information regarding its trading investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Stargate Corp. shares $20,000 $19,000 $(1,000) Carolina Co. shares 10,000 9,000 (1,000) Vectorman Co. shares 20,000 20,600 600 Total of portfolio $50,000 $48,600 $(1,400) Previous fair value adjustment balance –0– Fair value adjustment—Cr. $(1,400) During 2021, Carolina Co. shares were sold for $9,500. The fair value of the shares on December 31, 2021, was Stargate Corp. shares—$19,300; Vectorman Co. shares—$20,500. Instructions a. Prepare the adjusting journal entry needed on December 31, 2020. b. Prepare the journal entry to record the sale of the Carolina Co. shares during 2021. c. Prepare the adjusting journal entry needed on December 31, 2021.
On December 21, 2020, Zurich Company provided you with the following information regarding its trading investments. December 31, 2020 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Stargate Corp. shares $20,000 $19,000 $(1,000) Carolina Co. shares 10,000 9,000 (1,000) Vectorman Co. shares 20,000 20,600 600 Total of portfolio $50,000 $48,600 $(1,400) Previous fair value adjustment balance –0– Fair value adjustment—Cr. $(1,400) During 2021, Carolina Co. shares were sold for $9,500. The fair value of the shares on December 31, 2021, was Stargate Corp. shares—$19,300; Vectorman Co. shares—$20,500. Instructions a. Prepare the adjusting journal entry needed on December 31, 2020. b. Prepare the journal entry to record the sale of the Carolina Co. shares during 2021. c. Prepare the adjusting journal entry needed on December 31, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On December 21, 2020, Zurich Company provided you with the following information regarding its trading investments.
| December 31, 2020 | ||||||
| Investments (Trading) | Cost | Fair Value | Unrealized Gain (Loss) | |||
| Stargate Corp. shares | $20,000 | $19,000 | $(1,000) | |||
| Carolina Co. shares | 10,000 | 9,000 | (1,000) | |||
| Vectorman Co. shares | 20,000 | 20,600 | 600 | |||
| Total of portfolio | $50,000 | $48,600 | $(1,400) | |||
| Previous fair value adjustment balance | –0– | |||||
| Fair value adjustment—Cr. | $(1,400) |
During 2021, Carolina Co. shares were sold for $9,500. The fair value of the shares on December 31, 2021, was Stargate Corp. shares—$19,300; Vectorman Co. shares—$20,500.
Instructions
a. Prepare the
b. Prepare the journal entry to record the sale of the Carolina Co. shares during 2021.
c. Prepare the adjusting journal entry needed on December 31, 2021.
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