Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter D, Problem D.10EX
Fair value
Jets Bancorp Inc. purchased a portfolio of trading securities during 20Y3.The cost and fair value of this portfolio on December 31, 20Y3, was as follows:
| Name | Number of Shares | Total Cost | Total Fair Value |
| Dolphins Inc. | 1,400 | $28,000 | $30,800 |
| Marino Company | 1,200 | 30,000 | 27,600 |
| Namath Company | 800 | 28,000 | 26,400 |
| Total | $86,000 | $84,800 |
Journalize the entry to record the adjustment of the trading security portfolio to fair value on December 31, 20Y3.
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Fair Value Journal Entries, Trading Investments
Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair value of this portfolio on December 31, Year 1, was as follows:
Name
Number of Shares
Total Cost
Total Fair Value
Griffin Inc.
1,400
$18,760
$17,630
Luck Company
750
24,600
22,880
Wilson Company
350
10,500
10,710
Total
$53,860
$51,220
On May 10, Year 2, Gruden Bancorp Inc. purchased 500 shares of Carroll Inc., at $30 per share plus a $90 brokerage commission.
Provide the journal entries to record the following:
a. The adjustment of the trading security portfolio to fair value on December 31, Year 1.
Year 1, Dec. 31
fill in the blank fc5d10fdb048f9d_2
fill in the blank fc5d10fdb048f9d_4
b. The May 10, Year 2, purchase of Carroll Inc. stock.
Year 2, May 10
fill in the blank 1c85c7f3ff9905c_2
Fair Value Journal Entries, Trading Investments
Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair value of this portfolio on December 31, Year 1, was as follows:
Name
Number of Shares
Total Cost
Total Fair Value
Griffin Inc.
1,100
$14,740
$13,860
Luck Company
850
27,880
25,930
Wilson Company
250
7,250
7,400
Total
$49,870
$47,190
On May 10, Year 2, Gruden Bancorp Inc. purchased 500 shares of Carroll Inc., at $29 per share plus a $80 brokerage commission.
Provide the journal entries to record the following:
a. The adjustment of the trading security portfolio to fair value on December 31, Year 1.
Year 1, Dec. 31
b. The May 10, Year 2, purchase of Carroll Inc. stock.
Year 2, May 10
Journal entries for trading investments
Gruden Bancorp Inc. purchased a portfolio of trading securities during 20Y3, its first year of operations. The cost and fair value of this portfolio on December 31, 20Y3, are as follows:
Issuing Company
Cost
Fair Value
Griffin Inc.
$14,070
$13,230
Luck Company
22,960
21,350
Wilson Company
9,300
9,490
Total
$46,330
$44,070
On May 10, 20Y4, Gruden Bancorp Inc. purchased trading securities of Carroll Inc. for $15,610.
Journalize the entries to record the following: If an amount box does not require an entry, leave it blank.
a. The adjusting entry for the portfolio of trading securities on December 31, 20Y3.
20Y3, Dec. 31
b. The May 10, 20Y4, purchase of Carroll Inc. securities.
20Y4, May 10
c. The adjusting entry for the portfolio of trading securities on December 31, 20Y4. Assume that except for the purchase of Carroll Inc. securities there were no other transactions involving trading securities in 20Y4. In addition, assume that the fair
value of…
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