Stoll Company's long-term available-for-sale portfolio at the start of this year consists of the following. Available-for-Sale SecuritiesCostFair ValueCompany A bonds$ 534,100$ 492,000Company B notes159,140155,000Company C bonds662,400642,140Stoll enters into the following transactions involving its available-for-sale debt securities this year. January 29Sold one-half of the Company B notes for $78,820.July 6Purchased Company X bonds for $122,100.November 13Purchased Company Z notes for $267,300.December 9Sold all of the Company A bonds for $524,800.Fair values at December 31 are B, $82,300; C, $603,800; X, $120,000; and Z, $276,000. Problem 15-3A (Algo) Part 1 and 2Required:1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities.2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities. ### Fair Value Adjustment Computation - Available-for-Sale Securities#### December 31 AFS Securities| | **Cost** | **Fair Value** | **Unrealized Amount** ||-------|----------|----------------|-----------------------|| 1. | | | || 2. | | | || 3. | | | || 4. | | | || 5. | | | || **Total** | **$** | **$ 0** | **0** |#### December 31 Balance in the Fair Value Adjustment account- (6 blank lines to fill in value adjustments)This table is used to calculate the fair value adjustments for securities classified as ‘Available-for-Sale’ (AFS) as of December 31. For each security, the cost and fair value are recorded, and the unrealized amount (the difference between cost and fair value) is computed. The total for all securities is then listed to reach the aggregate unrealized gain or loss. The balance section is used for recording adjustments in the account at the end of the year. ### Year-End Adjusting Entry for Securities Portfolio**Instructions:**Record the year-end adjusting entry for the securities portfolio as of December 31.**Format:**- **Date**: December 31- **General Journal**: (Account details to be entered)- **Debit**: (Amount to be entered)- **Credit**: (Amount to be entered)**Guidelines:**- **Important Note**: Enter debits before credits.**Interactive Options:**- **Buttons**: - **Record entry**: Use this to save your journal entry. - **Clear entry**: Use this to remove current input and start over. - **View general journal**: Use this to review all journal entries.The table layout provides fields under the columns "Date," "General Journal," "Debit," and "Credit," where specific financial details must be inputted to correctly record the adjusting entry.

Debt securities refer to the financial assets that are being repaid the principal amount to the borrower with the interest rate depending upon the creditworthiness of the borrower.Preparation of journal entries Formula Snip: Calculation of fair value adjustment available Formula Snip: Hence, the unrealized value for Company B notes is $2,730 The unrealized value for Company Z notes is $8,700

Answered: Stoll Company's long-term…

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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Available-for-Sale Securities	Cost	Fair Value
Company A bonds	$ 534,100	$ 492,000
Company B notes	159,140	155,000
Company C bonds	662,400	642,140

January 29	Sold one-half of the Company B notes for $78,820.
July 6	Purchased Company X bonds for $122,100.
November 13	Purchased Company Z notes for $267,300.
December 9	Sold all of the Company A bonds for $524,800.

Problem 15-3A (Algo) Part 1 and 2

Required:
1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities.
2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities.

### Fair Value Adjustment Computation - Available-for-Sale Securities

#### December 31 AFS Securities

| | **Cost** | **Fair Value** | **Unrealized Amount** |
|-------|----------|----------------|-----------------------|
| 1. | | | |
| 2. | | | |
| 3. | | | |
| 4. | | | |
| 5. | | | |
| **Total** | **$** | **$ 0** | **0** |

#### December 31 Balance in the Fair Value Adjustment account

- (6 blank lines to fill in value adjustments)

This table is used to calculate the fair value adjustments for securities classified as ‘Available-for-Sale’ (AFS) as of December 31. For each security, the cost and fair value are recorded, and the unrealized amount (the difference between cost and fair value) is computed. The total for all securities is then listed to reach the aggregate unrealized gain or loss. The balance section is used for recording adjustments in the account at the end of the year.

### Year-End Adjusting Entry for Securities Portfolio

**Instructions:**

Record the year-end adjusting entry for the securities portfolio as of December 31.

**Format:**

- **Date**: December 31
- **General Journal**: (Account details to be entered)
- **Debit**: (Amount to be entered)
- **Credit**: (Amount to be entered)

**Guidelines:**

- **Important Note**: Enter debits before credits.

**Interactive Options:**

- **Buttons**:
- **Record entry**: Use this to save your journal entry.
- **Clear entry**: Use this to remove current input and start over.
- **View general journal**: Use this to review all journal entries.

The table layout provides fields under the columns "Date," "General Journal," "Debit," and "Credit," where specific financial details must be inputted to correctly record the adjusting entry.

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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Can you please assist with the highlighted sections? I used the formulas provided and still can not figure these out.

Fair Value Adjustment Computation - Available-for-Sale Securities
Cost
Fair Value
December 31 AFS Securities
Company B notes
Company C bonds
Company X bonds
Company Z notes
Total
$
$
79,570 $
662,400
122,100
267,300
1,131,370 $
December 31 Balance in the Fair Value Adjustment account
Balance at beginning of year in the Fair Value Adjustment account
December 31 required adjustment to the Fair Value Adjustment account
82,300
603,800
120,000
276,000
1,082,100
Unrealized
Amount
0
Loss
Credit
Credit
Debit
0

Journal entry worksheet
1
2
Date
December
31
3
Note: Enter debits before credits.
Record the year-end adjusting entry for the securities portfolio as of December
31.
4
Record entry
5
Fair value adjustment - AFS
Unrealized gain - Equity
General Journal
Clear entry
Debit
Credit
View general journal

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