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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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:

Journalize the entries to record these transactions. Round all final amounts to the nearest whole dollar.*

Prepare the investment-related current asset balance sheet presentation for Rios Financial Co. on December 31, Year 2.*

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.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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