The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Question

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Answer 1

Question

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.

Chapter 5, Problem 1QC

To determine

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Expert Solution & Answer

Answer to Problem 1QC

Answer: (b) $35,000

Explanation of Solution

Trading securities:

These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.

The trading securities are recorded at fair value in the financial statements. D Production adjusts the trading securities to its fair value using an adjustment entry as follows:

Date	Account title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2016	Investments (trading securities)		10,000
	Unrealized gain on trading securities			10,000
	(To record the unrealized gain on trading securities)

Table (1)

Explanation for the journal entry:

Investments (assets account) is increased. Thus, investments (trading securities) are debited with $10,000.
Unrealized gain on trading securities (retained earnings account) is increased. Thus, unrealized gain on trading securities is credited with $10,000 ($35,000 − $25,000) .

Here the investment account is increased by $10,000 and the closing balance of investments (trading securities) is increased to $35,000. Hence, in the balance sheet of D Production the trading securities are reported at $35,000.

The above analysis says that option (b) $35,000 is the correct amount. Option (a) (c) and (d) are incorrect amounts.

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Answer 2

Question

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.

Chapter 5, Problem 1QC

To determine

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Expert Solution & Answer

Answer to Problem 1QC

Answer: (b) $35,000

Explanation of Solution

Trading securities:

These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.

The trading securities are recorded at fair value in the financial statements. D Production adjusts the trading securities to its fair value using an adjustment entry as follows:

Date	Account title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2016	Investments (trading securities)		10,000
	Unrealized gain on trading securities			10,000
	(To record the unrealized gain on trading securities)

Table (1)

Explanation for the journal entry:

Investments (assets account) is increased. Thus, investments (trading securities) are debited with $10,000.
Unrealized gain on trading securities (retained earnings account) is increased. Thus, unrealized gain on trading securities is credited with $10,000 ($35,000 − $25,000) .

Here the investment account is increased by $10,000 and the closing balance of investments (trading securities) is increased to $35,000. Hence, in the balance sheet of D Production the trading securities are reported at $35,000.

The above analysis says that option (b) $35,000 is the correct amount. Option (a) (c) and (d) are incorrect amounts.

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Answer 3

Question

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.

Chapter 5, Problem 1QC

To determine

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Expert Solution & Answer

Answer to Problem 1QC

Answer: (b) $35,000

Explanation of Solution

Trading securities:

These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.

The trading securities are recorded at fair value in the financial statements. D Production adjusts the trading securities to its fair value using an adjustment entry as follows:

Date	Account title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2016	Investments (trading securities)		10,000
	Unrealized gain on trading securities			10,000
	(To record the unrealized gain on trading securities)

Table (1)

Explanation for the journal entry:

Investments (assets account) is increased. Thus, investments (trading securities) are debited with $10,000.
Unrealized gain on trading securities (retained earnings account) is increased. Thus, unrealized gain on trading securities is credited with $10,000 ($35,000 − $25,000) .

Here the investment account is increased by $10,000 and the closing balance of investments (trading securities) is increased to $35,000. Hence, in the balance sheet of D Production the trading securities are reported at $35,000.

The above analysis says that option (b) $35,000 is the correct amount. Option (a) (c) and (d) are incorrect amounts.

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Answer 4

Question

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.

Chapter 5, Problem 1QC

To determine

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Expert Solution & Answer

Answer to Problem 1QC

Answer: (b) $35,000

Explanation of Solution

Trading securities:

These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.

The trading securities are recorded at fair value in the financial statements. D Production adjusts the trading securities to its fair value using an adjustment entry as follows:

Date	Account title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2016	Investments (trading securities)		10,000
	Unrealized gain on trading securities			10,000
	(To record the unrealized gain on trading securities)

Table (1)

Explanation for the journal entry:

Investments (assets account) is increased. Thus, investments (trading securities) are debited with $10,000.
Unrealized gain on trading securities (retained earnings account) is increased. Thus, unrealized gain on trading securities is credited with $10,000 ($35,000 − $25,000) .

Here the investment account is increased by $10,000 and the closing balance of investments (trading securities) is increased to $35,000. Hence, in the balance sheet of D Production the trading securities are reported at $35,000.

The above analysis says that option (b) $35,000 is the correct amount. Option (a) (c) and (d) are incorrect amounts.

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Answer 5

Chapter 5, Problem 1QC

To determine

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Expert Solution & Answer

Answer to Problem 1QC

Answer: (b) $35,000

Explanation of Solution

Trading securities:

These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.

The trading securities are recorded at fair value in the financial statements. D Production adjusts the trading securities to its fair value using an adjustment entry as follows:

Date	Account title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2016	Investments (trading securities)		10,000
	Unrealized gain on trading securities			10,000
	(To record the unrealized gain on trading securities)

Table (1)

Explanation for the journal entry:

Investments (assets account) is increased. Thus, investments (trading securities) are debited with $10,000.
Unrealized gain on trading securities (retained earnings account) is increased. Thus, unrealized gain on trading securities is credited with $10,000 ($35,000 − $25,000) .

Here the investment account is increased by $10,000 and the closing balance of investments (trading securities) is increased to $35,000. Hence, in the balance sheet of D Production the trading securities are reported at $35,000.

The above analysis says that option (b) $35,000 is the correct amount. Option (a) (c) and (d) are incorrect amounts.

Answer 6

Chapter 5, Problem 1QC

To determine

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Expert Solution & Answer

Answer to Problem 1QC

Answer: (b) $35,000

Explanation of Solution

Trading securities:

These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.

The trading securities are recorded at fair value in the financial statements. D Production adjusts the trading securities to its fair value using an adjustment entry as follows:

Date	Account title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2016	Investments (trading securities)		10,000
	Unrealized gain on trading securities			10,000
	(To record the unrealized gain on trading securities)

Table (1)

Explanation for the journal entry:

Investments (assets account) is increased. Thus, investments (trading securities) are debited with $10,000.
Unrealized gain on trading securities (retained earnings account) is increased. Thus, unrealized gain on trading securities is credited with $10,000 ($35,000 − $25,000) .

Here the investment account is increased by $10,000 and the closing balance of investments (trading securities) is increased to $35,000. Hence, in the balance sheet of D Production the trading securities are reported at $35,000.

The above analysis says that option (b) $35,000 is the correct amount. Option (a) (c) and (d) are incorrect amounts.

Answer 7

Chapter 5, Problem 1QC

To determine

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Answer 8

Expert Solution & Answer

Answer to Problem 1QC

Answer: (b) $35,000

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Trading securities:

These are short-term investments in debt and equity securities with an intention of trading and earning profits due to changes in market prices.

The trading securities are recorded at fair value in the financial statements. D Production adjusts the trading securities to its fair value using an adjustment entry as follows:

Date	Account title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2016	Investments (trading securities)		10,000
	Unrealized gain on trading securities			10,000
	(To record the unrealized gain on trading securities)

Table (1)

Explanation for the journal entry:

Investments (assets account) is increased. Thus, investments (trading securities) are debited with $10,000.
Unrealized gain on trading securities (retained earnings account) is increased. Thus, unrealized gain on trading securities is credited with $10,000 ($35,000 − $25,000) .

Here the investment account is increased by $10,000 and the closing balance of investments (trading securities) is increased to $35,000. Hence, in the balance sheet of D Production the trading securities are reported at $35,000.

The above analysis says that option (b) $35,000 is the correct amount. Option (a) (c) and (d) are incorrect amounts.

Answer 12

Ch. 5 - Prob. 1QC Ch. 5 - Prob. 2QC Ch. 5 - Prob. 3QC Ch. 5 - Prob. 4QC Ch. 5 - Prob. 5QC Ch. 5 - Prob. 6QC Ch. 5 - Prob. 7QC Ch. 5 - Prob. 8QC Ch. 5 - Prob. 9QC Ch. 5 - Prob. 10QC

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

The appropriate amount to report for the investments on the December 31, 2016, balance sheet of D Productions.

Answer to Problem 1QC

Explanation of Solution

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Chapter 5 Solutions