Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following selected transactions relate to investments acquired by Rios Co., which has a fiscal year ending on December 31:Record these transactions on page 10:20Y2 Feb.1Purchased 7,500 shares of Caldwell Inc. common stock at $50 per share plus a brokerage commission of $75. Caldwell has 100,000 shares of common stock outstanding.May1Purchased securities of Holland Inc. as a trading investment for $126,000.July1Sold 4,500 shares of Caldwell Inc. for $46 per share less a $110 brokerage commission. 31Received an annual dividend of $0.50 per share on 3,000 shares of Caldwell Inc. stock.Nov.15Sold the remaining shares of Caldwell Inc. for $51 per share less a $90 brokerage commission.Dec.31The trading securities of Holland Inc. have a fair value on December 31 of $120,000. Record these transactions on page 11:20Y3 Apr.1Purchased securities of Fuller Inc. as a trading investment for $125,000.Oct.14Sold securities of Fuller Inc. that cost $25,000 for $30,000.Dec.31The fair values of the Holland Inc. and Fuller Inc. securities are as follows: Issuing CompanyCostFair ValueHolland Inc.$126,000$132,500Fuller Inc.100,000115,600 Required:1.Journalize the entries to record the preceding transactions, including any December 31 adjusting entries. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your intermediate calculations to two decimal places and round your final answers to the nearest dollar.2.Prepare the Trading Investments section of the December 31, 20Y3, balance sheet for Rios Co. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed.3.How are unrealized gains or losses on trading investments presented on the financial statements of Rios Co.? The image contains journal entries related to financial transactions for the years 20Y2 and 20Y3, which are detailed below for educational purposes:### Journal Entries for 20Y2 Transactions:#### Page 10:- **February 1** - *Investments–Caldwell, Inc. Stock* - Debit: $375,075.00 - Credit: $375,075.00 - *Cash* - Credit: $375,075.00 - **Accounting Equation Impact:** - Assets increase, Equity unchanged- **May 1** - *Trading Investments–Holland Inc.* - Debit: $126,000.00 - Credit: $126,000.00 - *Cash* - Credit: $126,000.00 - **Accounting Equation Impact:** - Assets increase, Equity unchanged- **July 1** - *Cash* - Debit: $206,890.00 - *Loss on Sale of Investments* - Debit: $18,155.00 - *Investments–Caldwell, Inc. Stock* - Credit: $225,045.00 - **Accounting Equation Impact:** - Asset adjustment, Equity reduction due to loss- **July 31** - *Cash* - Debit: $1,500.00 - *Dividend Revenue* - Credit: $1,500.00 - **Accounting Equation Impact:** - Assets increase, Equity increases- **November 15** - *Cash* - Debit: $152,910.00 - *Investments–Caldwell Inc. Stock* - Credit: $100,000.00 - *Gain on Sale of Investment* - Credit: $52,910.00 - **Accounting Equation Impact:** - Assets increased, Equity increased due to gain- **December 31 (Adjusting Entries)** - *Unrealized Loss on Trading Investments* - Debit: $6,000.00 - *Valuation Allowance for Trading Investments* - Credit: $6,000.00 - **Accounting Equation Impact:** - Assets decrease, Equity decrease due to unrealized loss### Journal Entries for 20Y3 Transactions ### Investment Transactions for Rios Co.**Description**: Rios Co. is a regional insurance company that began operations on January 1, 20Y2. Below are selected transactions related to investments acquired by Rios Co., which operates with a fiscal year ending on December 31:#### Transactions for 20Y2- **February 1**: Rios Co. purchased 7,500 shares of Caldwell Inc. common stock at $50 per share. There was an additional brokerage commission of $75. Caldwell Inc. has a total of 100,000 shares of common stock outstanding.- **May 1**: Purchased securities of Holland Inc. as a trading investment for $36,000.- **July 1**: Sold 4,500 shares of Caldwell Inc. for $46 per share. This transaction incurred a $110 brokerage commission.- **July 31**: Rios Co. received an annual dividend of $0.50 per share on 3,000 shares of Caldwell Inc. stock.- **November 15**: Sold the remaining shares of Caldwell Inc. for $51 per share. This sale incurred a $90 brokerage commission.- **December 31**: The trading securities of Holland Inc. have a fair value of $120,000.#### Transactions for 20Y3- **April 1**: Purchased securities of Fuller Inc. as a trading investment for $125,000.- **October 14**: Sold securities of Fuller Inc. that initially cost $25,000 for $30,000.- **December 31**: The fair values of the Holland Inc. and Fuller Inc. securities are given as: | Issuing Company | Cost | Fair Value | |-----------------|-----------|------------| | Holland Inc. | $126,000 | $132,500 | | Fuller Inc. | $100,000 | $115,600 |These transactions reflect the strategic financial activities involving trading and investment decisions made by Rios Co., impacting the company’s financial standing at the end of fiscal years 20Y2 and 20Y3.

As per the given information we are required to pass journal entries for the true and correct financial position for the purchase ,sale and recording of unrealized profits and losses.Date Particulars Debit Credit 20Y2 Feb1 Investments - Caldwell Inc $375,075 Cash $375,075 (7,500shares x 50) + $75 May1 Investment - Holland Inc $126,000 Cash $126,000 July1 Cash $2,06,890 Loss on sale of Investment $18,155 Investments Caldwell Inc $225,045 (4,500 shares x 46) - 110 = $206,890 ($375,075/7,500 x 4,500) = $225,045 July31 Cash $1,500 Dividend revenue $1,500 (3,000shares x 0.50) Nov15 Cash $152,910 Gain on sale of investment $2,880 Investments Caldwell Inc $150,030 (7,500 shares - 4,500 shares) $375,075/7,500 x 3,000 = $150,030 Dec31 Unrealized Loss of Trading Investment $6,000 Valuation Allowance for Trading Investment $6,000 20Y3 April1 Investment - Fuller Inc $125,000 Cash $125,000 Oct14 Cash $30,000 Profit on sale Investment $5,000 Investment - Fuller Inc $25,000 2. Balance sheet Current assets Trading investments (at cost) $236,275 Add: Valuation Allowance for trading investments $6,000 Trading Investments (at fair value) $242,2753. Unrealized gains reported Other income/(losses) Line in income statement

Business

Accounting

Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following selected transactions relate to investments acquired by Rios Co., which has a fiscal year ending on December 31: Record these transactions on page 10: 20Y2 Feb. 1 Purchased 7,500 shares of Caldwell Inc. common stock at $50 per share plus a brokerage commission of $75. Caldwell has 100,000 shares of common stock outstanding. May 1 Purchased securities of Holland Inc. as a trading investment for $126,000. July 1 Sold 4,500 shares of Caldwell Inc. for $46 per share less a $110 brokerage commission. 31 Received an annual dividend of $0.50 per share on 3,000 shares of Caldwell Inc. stock. Nov. 15 Sold the remaining shares of Caldwell Inc. for $51 per share less a $90 brokerage commission. Dec. 31 The trading securities of Holland Inc. have a fair value on December 31 of $120,000. Record these transactions on page 11: 20Y3 Apr. 1 Purchased securities of Fuller Inc. as a trading investment for $125,000. Oct. 14 Sold securities of Fuller Inc. that cost $25,000 for $30,000. Dec. 31 The fair values of the Holland Inc. and Fuller Inc. securities are as follows: Issuing Company Cost Fair Value Holland Inc. $126,000 $132,500 Fuller Inc. 100,000 115,600 Required: 1. Journalize the entries to record the preceding transactions, including any December 31 adjusting entries. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your intermediate calculations to two decimal places and round your final answers to the nearest dollar. 2. Prepare the Trading Investments section of the December 31, 20Y3, balance sheet for Rios Co. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed. 3. How are unrealized gains or losses on trading investments presented on the financial statements of Rios Co.?

Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following selected transactions relate to investments acquired by Rios Co., which has a fiscal year ending on December 31: Record these transactions on page 10: 20Y2 Feb. 1 Purchased 7,500 shares of Caldwell Inc. common stock at $50 per share plus a brokerage commission of $75. Caldwell has 100,000 shares of common stock outstanding. May 1 Purchased securities of Holland Inc. as a trading investment for $126,000. July 1 Sold 4,500 shares of Caldwell Inc. for $46 per share less a $110 brokerage commission. 31 Received an annual dividend of $0.50 per share on 3,000 shares of Caldwell Inc. stock. Nov. 15 Sold the remaining shares of Caldwell Inc. for $51 per share less a $90 brokerage commission. Dec. 31 The trading securities of Holland Inc. have a fair value on December 31 of $120,000. Record these transactions on page 11: 20Y3 Apr. 1 Purchased securities of Fuller Inc. as a trading investment for $125,000. Oct. 14 Sold securities of Fuller Inc. that cost $25,000 for $30,000. Dec. 31 The fair values of the Holland Inc. and Fuller Inc. securities are as follows: Issuing Company Cost Fair Value Holland Inc. $126,000 $132,500 Fuller Inc. 100,000 115,600 Required: 1. Journalize the entries to record the preceding transactions, including any December 31 adjusting entries. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your intermediate calculations to two decimal places and round your final answers to the nearest dollar. 2. Prepare the Trading Investments section of the December 31, 20Y3, balance sheet for Rios Co. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed. 3. How are unrealized gains or losses on trading investments presented on the financial statements of Rios Co.?

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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20Y2
Feb.	1	Purchased 7,500 shares of Caldwell Inc. common stock at $50 per share plus a brokerage commission of $75. Caldwell has 100,000 shares of common stock outstanding.
May	1	Purchased securities of Holland Inc. as a trading investment for $126,000.
July	1	Sold 4,500 shares of Caldwell Inc. for $46 per share less a $110 brokerage commission.
	31	Received an annual dividend of $0.50 per share on 3,000 shares of Caldwell Inc. stock.
Nov.	15	Sold the remaining shares of Caldwell Inc. for $51 per share less a $90 brokerage commission.
Dec.	31	The trading securities of Holland Inc. have a fair value on December 31 of $120,000.

20Y3
Apr.	1	Purchased securities of Fuller Inc. as a trading investment for $125,000.
Oct.	14	Sold securities of Fuller Inc. that cost $25,000 for $30,000.
Dec.	31	The fair values of the Holland Inc. and Fuller Inc. securities are as follows:

Issuing Company	Cost	Fair Value
Holland Inc.	$126,000	$132,500
Fuller Inc.	100,000	115,600

	Required:
1.	Journalize the entries to record the preceding transactions, including any December 31 adjusting entries. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Round your intermediate calculations to two decimal places and round your final answers to the nearest dollar.
2.	Prepare the Trading Investments section of the December 31, 20Y3, balance sheet for Rios Co. Be sure to complete the statement heading. Refer to the Chart of Accounts and the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed.
3.	How are unrealized gains or losses on trading investments presented on the financial statements of Rios Co.?