Explanation Trading securities (TS): The category of passive investments which are bought with a purpose to sell in the near future are referred to as trading securities. The percentage of passive investments in debt or equity will be less than 20%. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Debit and credit rules: Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts. Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts. Prepare journal entry for purchase of investment in trading securities . Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) December 2 Investments in TS 93,750 Cash 93,750 (To record investment in TS) Table (1) Description: Investments in TS is an asset account. Since stock investments are purchased, asset value increased, and an increase in asset is debited. Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited. Working Notes: Compute cost of investment in TS. Cost of investment = Number of shares × Price per share = 6 , 25 0 shares × $15 per share = $ 93 , 750 (1) Prepare journal entry for cash dividend received . Date Account Titles and Explanation Post Ref. Debit ($) Credit ($) December 15 Cash 12,500 Dividend Revenue 12,500 (To record receipt of dividend) Table (2) Description: Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited. Dividend Revenue is a revenue account. Since revenues increase equity, equity value is increased, and an increase in equity is credited. Working Notes: Compute amount of dividend received

Connect Access Card for Financial Accounting

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ISBN: 9781259738678

Author: Robert Libby, Patricia Libby, Frank Hodge Ch

Publisher: McGraw-Hill Education

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading struc…

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Journalize the entries related to investment in trading securities.

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Ch. A - Prob. 1Q Ch. A - Explain the difference in accounting methods used...Ch. A - Explain how bonds held to maturity are reported on...Ch. A - Explain the application of the cost principle to...Ch. A - Under the fair value method, when and how does the...Ch. A - Under the equity method, why does the investor...Ch. A - Prob. 7Q Ch. A - Prob. 8Q Ch. A - Prob. 9Q Ch. A - Company X owns 40 percent of Company Y and...

Ch. A - Prob. 2MCQ Ch. A - Dividends received from stock that is reported as...Ch. A - Prob. 4MCQ Ch. A - Prob. 5MCQ Ch. A - When using the equity method of accounting, when...Ch. A - Prob. 7MCQ Ch. A - Prob. 8MCQ Ch. A - Which of the following is true regarding the...Ch. A - Prob. 10MCQ Ch. A - Matching Measurement and Reporting Methods Match...Ch. A - Prob. 2ME Ch. A - Prob. 3ME Ch. A - Prob. 4ME Ch. A - Prob. 5ME Ch. A - Prob. 6ME Ch. A - Prob. 7ME Ch. A - Prob. 8ME Ch. A - Prob. 9ME Ch. A - Prob. 10ME Ch. A - Prob. 11ME Ch. A - Prob. 1E Ch. A - Prob. 2E Ch. A - Recording Transactions in the Available-for-Sale...Ch. A - Prob. 4E Ch. A - Prob. 5E Ch. A - Reporting Gains and Losses in the Trading...Ch. A - Prob. 7E Ch. A - Prob. 8E Ch. A - Prob. 9E Ch. A - Prob. 10E Ch. A - Prob. 11E Ch. A - Prob. 1P Ch. A - Prob. 2P Ch. A - Prob. 3P Ch. A - Prob. 4P Ch. A - Prob. 5P Ch. A - Comparing Methods to Account for Various Levels of...Ch. A - Prob. 7P Ch. A - Recording Investments for Significant Influence LO...Ch. A - Prob. 9P Ch. A - Prob. 10P Ch. A - Prob. 11P Ch. A - Prob. 1AP Ch. A - Prob. 2AP Ch. A - Reporting Passive Investments During January 2017,...Ch. A - Prob. 4AP Ch. A - Prob. 5AP Ch. A - Prob. 6AP Ch. A - Prob. 1CON Ch. A - Finding Financial Information Refer to the...Ch. A - Prob. 2CP Ch. A - Prob. 3CP Ch. A - Prob. 4CP Ch. A - Prob. 5CP Ch. A - Prob. 6CP

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