The investments of Steelers Inc. include a single investment: 33,100 shares of Bengals Inc. common stock purchased on September 12, Year 1, for $13 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, Year 1, balance sheet date, the share price declined to $11 per share.a. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, Year 1.b. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?

The investments of Steelers Inc. include a single investment: 33,100 shares of Bengals Inc. common stock purchased on September 12, Year 1, for $13 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, Year 1, balance sheet date, the share price declined to $11 per share.a. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, Year 1.b. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 20E: The investments of Steelers Inc. include a single investment: 33,100 shares of Bengals Inc. common...

See similar textbooks

Related questions

Q: Fair value journal entries, trading investmentsThe investments of Charger Inc. include a single…

A: Journal entry is a primary entry that records the financial transactions initially.

Q: The investments of Charger Inc. include a single investment: 14,500 shares of Raiders Inc. common…

A: Trading securities: These are short-term investments in debt and equity securities with an intention…

Q: Yerbury Corp. manufactures construction equipment. Journalize the entries to record the following…

A: Working Notes: (1000 shares * $40 per share) + $500 brokerage commission Cash dividend: 1000 shares…

Q: Rios Co. is a regional insurance company that began operations on January 1, 20Y2. The following…

A: As per the given information we are required to pass journal entries for the true and correct…

Q: Rohit Ltd. Purchased assets worth Re. 41,80,000 from Bhuvnesh IndustrialCorporation and issued…

A: A company can issue its shares either at par, at a premium, or even at a discount. The shares will…

Q: n May 1, 20x1, Damage, Inc. declared cash dividends of P20 per share to shareholders of record on…

A: Journal entry is the part of book keeping.

Q: Baur Company acquired 20,000 ordinary shares on October 1 for P1,344,000 to be held for trading. On…

A: Gain on Sale of trading securities:-When marketable securities sell in the market more than the cost…

Q: Baur Company acquired 20,000 ordinary shares on October 1 for P1,344,000 to be held for trading. On…

A: Stock: Stock is a share that describes the ownership of an individual in the corporation. These…

Q: Derr Co. purchases stock investments (with insignificant influence) at a cost of $250 on December…

A: Held for trading security: It can be defined as a security that is purchased by the investor with…

Q: Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair…

A: Journal entry is a process of recording the business transactions in the books of accounts for the…

Q: On November 1 of Year 1, Drucker Co. acquired the following investments in equity securities…

A: Journal entry is a primary entry that records the financial transactions initially.

Q: Clark Company acquired 15% of the 500,000 shares of common stock of Davis Company at a total cost of…

A: When something happens in a business and it can be quantified and stated in monetary terms, it…

Q: Fair Value Journal Entries, Trading Investments Gruden Bancorp Inc. purchased a portfolio of trading…

A: Journal entries records the transaction in such a way that there are2 effects in the financial…

Q: At a total cost of $6,950,000, Herrera Corporation acquired 229,500 shares of Tran Corp. common…

A: The investment in other companies is recorded as assets for the business.

Q: Forte Inc. produces and sells theater set designs and costumes. The company began operations on…

A: Date Accounts and explanation Debit Credit Year 1 Purchased 29,800…

Q: Derr Co. purchases stock investments (with insignificant influence) at a cost of $250 on December…

A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…

Q: The following equity investment transactions were completed by Vintage Company during a recent year:…

A: Journal Entries to transactions of Vintage Company during a recent year:- Date Journal Entry…

Q: On July 1, 2018 Tam Company purchased 3,000 shares of Del Company capital stock as a temporary…

Q: The securities owned by Jane Company were held as a long-term investment. During the current year,…

A: SOLUTION- CARRYING VALUE- IT IS A MEASURE OF VALUE OF COMPANY ASSETS . IT TYPICALLY MEASURED AS…

Q: Prepare journal entries to record the following transactions involving both the short-term and…

A: Solution: Introduction: Journal entry is an accounting entry to record every transaction takes place…

Question

The investments of Steelers Inc. include a single investment: 33,100 shares of Bengals Inc. common stock purchased on September 12, Year 1, for $13 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, Year 1, balance sheet date, the share price declined to $11 per share.
a. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, Year 1.
b. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The investments of Steelers Inc. include a single investment: 33,100 shares of Bengals Inc. common stock purchased on September 12, 2016, for 13 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, 2016, balance sheet date, the share price declined to 11 per share. a. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, 2016. b. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?
The investments of Charger Inc. include a single investment: 14,500 shares of Raiders Inc. common stock purchased on February 24, Year 1, for $38 per share including brokerage commission. These shares were classified as trading securities. As of the December 31,Year 1, balance sheet date, the share price had increased to $42 per share.a. Journalize the entries to acquire the investment on February 24 and record the adjustment to fair value on December 31, Year 1.b. How is the unrealized gain or loss for trading investments reported on the financial statements?
How do I solve this?
I need help understanding how to solve this
Zeus Investments Inc. is a regional investment company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Zeus Investments Inc., which has a fiscal year ending on December 31: Year 1 Feb. 14. Purchased 3,600 shares of Apollo Inc. as a trading security at $43 per share plus a brokerage commission of $720. Apr. 1. Purchased 1,700 shares of Ares Inc. as a trading security at $17 per share plus a brokerage commission of $340. June 1. Sold 900 shares of Apollo Inc. for $44 per share less an $120 brokerage commission. June 27. Received an annual dividend of $0.14 per share on Apollo Inc. stock. Dec. 31. The portfolio of trading securities was adjusted to fair values of $47 and $18 per share for Apollo Inc. and Ares Inc., respectively. Year 2 Mar. 14. Purchased 1,600 shares of Athena Inc. as a trading security at $50 per share plus a $240 brokerage commission. June 26. Received an annual dividend of $0.17 per…
Zeus Investments Inc. is a regional investment company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Zeus Investments Inc., which has a fiscal year ending on December 31: Year 1 Feb. 14. Purchased 3,400 shares of Apollo Inc. as a trading security at $38 per share plus a brokerage commission of $680. Apr. 1. Purchased 1,600 shares of Ares Inc. as a trading security at $15 per share plus a brokerage commission of $320. June 1. Sold 800 shares of Apollo Inc. for $39 per share less an $100 brokerage commission. June 27. Received an annual dividend of $0.11 per share on Apollo stock. Dec. 31. The portfolio of trading securities was adjusted to fair values of $42 and $16 per share for Apollo Inc. and Ares Inc., respectively. Year 2 Mar. 14. Purchased 1,500 shares of Athena Inc. as a trading security at $44 per share plus a $225 brokerage commission. June 26. Received an annual dividend of $0.14 per share…
On April 1, 2024, Sheridan Company purchased 34,400 common shares in Ecotown Ltd. for $18 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $20 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries) Date 10 Account Titles Debit Credit
Zeus Investments Inc. is a regional investment company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Zeus Investments Inc., which has a fiscal year ending on December 31:Year 1Feb. 14. Purchased 4,800 shares of Apollo Inc. as a trading security at $26 per share plus a brokerage commission of $192.Apr. 1. Purchased 2,300 shares of Ares Inc. as a trading security at $19 per share plus a brokerage commission of $92.June 1. Sold 600 shares of Apollo Inc. for $32 per share less a $100 brokerage commission.27. Received an annual dividend of $0.20 per share on Apollo Inc. stock.Dec. 31. The portfolio of trading securities was adjusted to fair values of $33 and $18.50 per share for Apollo Inc. and Ares Inc., respectively.Year 2Mar. 14. Purchased 1,200 shares of Athena Inc. as a trading security at $65 per share plus a $120 brokerage commission.June 26. Received an annual dividend of $0.21 per share on Apollo Inc. stock.July 30.…
On April 1, 2024, Sunland Company purchased 44,800 common shares in Ecotown Ltd. for $13 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $15 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles く Debit Credit
Prepare journal entries to record the following investment-related transactions of a company for its first year of operations: On May 4, the company purchased 600 shares of Orbital Company Stock at $140 per share as a short-term investment in an available-for-sale security. On July 1, received a $2.50 per share cash dividend on the Orbital Company stock purchased in transaction (a). On September 15, sold 250 shares of Orbital Company stock purchased in transaction (a) for $85 per share On October 15, sold 100 shares of Orbital Company stock purchased in transaction (a) for $185 per share
On April 1, 2024, Sandhill Company purchased 46,400 common shares in Ecotown Ltd. for $13 per share. Management has designated the investment as FVTOCI. On December 5, Ecotown paid dividends of $0.10 per share and its shares were trading at $15 per share on December 31. Prepare the required entries to record the purchase, dividends, and year-end adjusting journal entry (if any) for this investment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Save for Later Account Titles Debit Credit Attempts: 0 of 1 used Submit Answer
Quan Corp. manufactures construction equipment. Journalize the entries to record the following selected equity investment transactions completed by Quan during a recent year using the fair value method. Feb. 2 Purchased for cash 1,050 shares of Celeste Inc.’s common stock for $75 per share plus a $525 brokerage commission. Celeste Inc. has 82,000 shares of common stock outstanding. Mar. 6 Received dividends of $0.20 per share on Celeste Inc. stock. June 7 Purchased 650 shares of Celeste Inc. stock for $87 per share plus a $325 brokerage commission. July 26 Sold 1,200 shares of Celeste Inc. stock for $93 per share less a $600 brokerage commission. Quan assumes that the first investments purchased are the first investments sold. Sept. 25 Received dividends of $0.30 per share on Celeste Inc. stock. Dec. 31 At the end of the accounting period, the fair value of the remaining 500 shares of Celeste Inc. stock was $46,250. If an amount box does not require an entry, leave it…