Prepare journal entries to record the given transaction and prepare the
Explanation of Solution
Journal entry:
Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and equities.
- Credit, all increase in liabilities, revenues, and equities, all decrease in assets, and expenses.
Prepare the journal entries to record the given transactions as follows:
Date | Account Titles and Description | Post Ref. | Debit ($) | Credit ($) |
January 20, 2017 | Short-Term Investments -Company F(1) | 20,925 | ||
Cash | 20,925 | |||
(To record the Purchase of 800 shares for $26 per share along with a commission of $125) | ||||
February 9, 2017 | Short-Term Investments-Company L (2) | 97,928 | ||
Cash | 97,928 | |||
(To record the Purchase of 2,200 shares for $44.25 per share along with a commission of $578) | ||||
October 12, 2017 | Short-Term Investments-Company Z (3) | 5,825 | ||
Cash | 5,825 | |||
((To record the Purchase of 750 shares for $7.50 per share along with a commission of $200) | ||||
December 31, 2017 | Fair value adjustment-company ST(4) | 5,322 | ||
Unrealized gain | 5,322 | |||
(To record the fair value of securities) | ||||
April 15, 2018 | Cash | 22,915 | ||
Gain on Sale of Short-Term Investments | 1,990 | |||
Short-Term Investments-Company F(5) | 20,925 | |||
(To record the sale of 800 shares at $29 per share) | ||||
July 5, 2018 | Cash | 7,585 | ||
Gain on Sale of Short-Term Investments | 1,760 | |||
Short-Term Investments-Company Z(6) | 5,825 | |||
(To record the sale of 7500 shares at $10.25 per share) | ||||
July 22, 2018 | Short-Term Investments-Company H (7) | 48,444 | ||
Cash | 48,444 | |||
(To record the Purchase of 1,600 shares for $30 per share along with a commission of $444) | ||||
August 19, 2018 | Short-Term Investment-Company D (8) | 33,140 | ||
Cash | 33,140 | |||
(To record the Purchase of 1,800 shares for $18.25 per share along with a commission of $290) | ||||
December 31, 2018 | Unrealized Loss | 24,834 | ||
Fair value adjustment-company ST | 24,834 | |||
(To record the fair value of securities) | ||||
February 27, 2019 | Short-Term Investments -Company HC (10) | 116,020 | ||
Cash | 116,020 | |||
(To record the Purchase of 3,400 shares for $34 per share along with a commission of $420) | ||||
March 3, 2019 | Cash (11) | 39,750 | ||
Loss on Sale of Short-Term Investments | 8,694 | |||
Short-Term Investments-Company H | 48,444 | |||
(To record the sale of 1,600 shares at $25 per share) | ||||
June 21, 2019 | Cash (12) | 91,980 | ||
Loss on Sale of Short-Term Investments | 5,948 | |||
Short-Term Investments-Company L | 97,928 | |||
(To record the sale of 2,200 shares at $42 per share) | ||||
June 30, 2019 | Short-Term Investments -Company B&D (13) | 57,595 | ||
Cash | 57,595 | |||
(To record the Purchase of 1,200 shares for $47.50 per share along with a commission of $595) | ||||
November 1, 2019 | Cash | 32,541 | ||
Loss on Sale of Short-Term Investments | 599 | |||
Short-Term Investments-Company D (14) | 33,140 | |||
(To record the sale of 1,800 shares at $18.25 per share) | ||||
December 31, 2017 | Fair value adjustment-company ST (15) | 25,897 | ||
Unrealized gain | 25,897 | |||
(To record the fair value of securities) |
Table (1)
Working note:
Calculate the purchased value of short-term investment (Company C)
Calculate the purchased value of short-term investment (Company L)
Calculate the purchased value of short-term investment (Company Z)
Calculate the fair value adjustment for 2017.
Calculate the value of cash received from the sale of stock investment (Company F stocks)
Calculate the value of cash received from the sale of stock investment (Company Z stocks)
Calculate the purchased value of short-term investment (Company H)
Calculate the purchased value of short-term investment (Company D)
Calculate the fair value adjustment for 2018.
Calculate the purchased value of short-term investment (Company HC)
Calculate the value of cash received from the sale of stock investment (Company H stocks)
Calculate the value of cash received from the sale of stock investment (Company L stocks)
Calculate the purchased value of short-term investment (Company B&D)
Calculate the value of cash received from the sale of stock investment (Company D stocks)
Calculate the fair value adjustment for 2019.
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