Rios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Rios Financial Co., which has a fiscal year ending on December 31: Record these transactions on page 10: Year 1 Feb. 1. Purchased 4,900 shares of Caldwell Inc. as a trading security at $35 per share plus a brokerage commission of $490. May 1. Purchased 1,800 shares of Holland Inc. as a trading security at $47 plus a brokerage commission of $198. July 1. Sold 2,550 shares of Caldwell Inc. for $33 per share less a $95 brokerage commission. 31. Received an annual dividend of $0.30 per share on Caldwell Inc. stock. Dec. 31. The portfolio of trading securities was adjusted to fair values of $33 and $46 per share for Caldwell Inc. and Holland Inc., respectively. Record these transactions on page 11: Year 2 Apr. 1. Purchased 4,800 shares of Fuller Inc. as a trading security at $26 per share plus a $240 brokerage commission. July 31. Received an annual dividend of $0.40 per share on Caldwell Inc. stock. Oct. 14. Sold 960 shares of Fuller Inc. for $28 per share less a $30 brokerage commission. Dec. 31 The portfolio of trading securities had a cost of $267,315 and a fair value of $346,935, requiring a debit balance in Valuation Allowance for Trading Investments of $79,620 ($346,935 - $267,315). Thus, the credit balance from December 31, Year 1, is to be adjusted to the new balance. Required: 1. Journalize the entries to record these transactions. Round all final amounts to the nearest whole dollar.* 2. Prepare the investment-related current asset balance sheet presentation for Rios Financial Co. on December 31, Year 2.* 3. How are unrealized gains or losses on trading investments presented in the financial statements of Rios Financial Co.? *Refer to the information given and the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Rios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Rios Financial Co., which has a fiscal year ending on December 31: Record these transactions on page 10: Year 1 Feb. 1. Purchased 4,900 shares of Caldwell Inc. as a trading security at $35 per share plus a brokerage commission of $490. May 1. Purchased 1,800 shares of Holland Inc. as a trading security at $47 plus a brokerage commission of $198. July 1. Sold 2,550 shares of Caldwell Inc. for $33 per share less a $95 brokerage commission. 31. Received an annual dividend of $0.30 per share on Caldwell Inc. stock. Dec. 31. The portfolio of trading securities was adjusted to fair values of $33 and $46 per share for Caldwell Inc. and Holland Inc., respectively. Record these transactions on page 11: Year 2 Apr. 1. Purchased 4,800 shares of Fuller Inc. as a trading security at $26 per share plus a $240 brokerage commission. July 31. Received an annual dividend of $0.40 per share on Caldwell Inc. stock. Oct. 14. Sold 960 shares of Fuller Inc. for $28 per share less a $30 brokerage commission. Dec. 31 The portfolio of trading securities had a cost of $267,315 and a fair value of $346,935, requiring a debit balance in Valuation Allowance for Trading Investments of $79,620 ($346,935 - $267,315). Thus, the credit balance from December 31, Year 1, is to be adjusted to the new balance. Required: 1. Journalize the entries to record these transactions. Round all final amounts to the nearest whole dollar.* 2. Prepare the investment-related current asset balance sheet presentation for Rios Financial Co. on December 31, Year 2.* 3. How are unrealized gains or losses on trading investments presented in the financial statements of Rios Financial Co.? *Refer to the information given and the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 3PB: Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January...
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Rios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Rios Financial Co., which has a fiscal year ending on December 31:
Record these transactions on page 10:
Year 1
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|
|
Feb. | 1. | Purchased 4,900 shares of Caldwell Inc. as a trading security at $35 per share plus a brokerage commission of $490. |
May | 1. | Purchased 1,800 shares of Holland Inc. as a trading security at $47 plus a brokerage commission of $198. |
July | 1. | Sold 2,550 shares of Caldwell Inc. for $33 per share less a $95 brokerage commission. |
31. | Received an annual dividend of $0.30 per share on Caldwell Inc. stock. | |
Dec. | 31. | The portfolio of trading securities was adjusted to fair values of $33 and $46 per share for Caldwell Inc. and Holland Inc., respectively. |
Record these transactions on page 11:
Year 2
|
|
|
Apr. | 1. | Purchased 4,800 shares of Fuller Inc. as a trading security at $26 per share plus a $240 brokerage commission. |
July | 31. | Received an annual dividend of $0.40 per share on Caldwell Inc. stock. |
Oct. | 14. | Sold 960 shares of Fuller Inc. for $28 per share less a $30 brokerage commission. |
Dec. | 31 | The portfolio of trading securities had a cost of $267,315 and a fair value of $346,935, requiring a debit balance in Valuation Allowance for Trading Investments of $79,620 ($346,935 - $267,315). Thus, the credit balance from December 31, Year 1, is to be adjusted to the new balance. |
Required: | |||
1. | |||
2. | Prepare the investment-related current asset balance sheet presentation for Rios Financial Co. on December 31, Year 2.* | ||
3. | How are unrealized gains or losses on trading investments presented in the financial statements of Rios Financial Co.?
|
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