Question

 

Ophir Investments Inc. is a regional investment company that began operations on January 1, 2016. The following transactions relate to trading securities acquired by Ophir Investments Inc., which has a fiscal year ending on December 31:

2016
Feb. 3.	Purchased 3,200 shares of Mapco Inc. as a trading security at $44 per share plus a brokerage commission of $640.
Mar. 23.	Purchased 1,500 shares of Swift Inc. as a trading security at $18 per share plus a brokerage commission of $300.
May 19.	Sold 800 shares of Mapco Inc. for $45 per share less an $100 brokerage commission.
June 12.	Received an annual dividend of $0.12 per share on Mapco stock.
Dec. 31.	The portfolio of trading securities was adjusted to fair values of $48 and $19 per share for Mapco Inc. and Swift Inc., respectively.
2017
Apr. 9.	Purchased 1,400 shares of Corvair Inc. as a trading security at $51 per share plus a $210 brokerage commission.
June 15.	Received an annual dividend of $0.15 per share on Mapco Inc. stock.
Aug. 30.	Sold 300 shares of Corvair Inc. for $45 per share less a $90 brokerage commission.
Dec. 31.	The portfolio of trading securities had a cost of $189,645 and fair value of $185,500, requiring a credit balance in Valuation Allowance for Trading Investments of $4,145 ($189,645 - $185,500). Thus, the debit balance from December 31, 2016 is to be adjusted to the new balance.

1. Journalize the entries to record these transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. In your computations, round per share amounts to two decimal places. When required, round final answers to the nearest dollar.

Date	Amount	Debit	Credit
2016
Feb. 3	Investments-Mapco Inc.	141440
	Cash		141440
Mar. 23	Investments-Swift Inc.	27300
	Cash		27300
May 19	Cash	35900
	Gain on Sale of Investments		540
	Investments-Mapco Inc.		35360
June 12	Cash	288
	Dividend Revenue		288
Dec. 31	Valuation Allowance for Trading Investments
	Unrealized Gain on Trading Investments
2017
Apr. 9	Investments-Corvair Inc.	71610
	Cash		71610
June 15	Cash	360
	Dividend Revenue		360
Aug. 30	Cash	13410
	Loss on Sale of Investments	1935
	Investments-Corvair Inc.		15345
Dec. 31	Unrealized Loss on Trading Investments
	Valuation Allowance for Trading Investments

2. Prepare the investment-related current asset balance sheet presentation for Ophir Investments Inc. on December 31, 2017.

Ophir Investments Inc. Balance Sheet (selected Current Asset items) December 31, 2017
Current Assets:
Trading Investments (at Cost)
Less Valuation Allowance For Trading Investments
Trading Investments (at Fair Value)

Answer 1

Date	Amount	Debit	Credit
2016
Feb. 3	Investments-Mapco Inc.	141440
	Cash		141440
Mar. 23	Investments-Swift Inc.	27300
	Cash		27300
19-May	Cash	35900
	Gain on Sale of Investments		540
	Investments-Mapco Inc.		35360
12-Jun	Cash	288
	Dividend Revenue		288
Dec. 31	Valuation Allowance for Trading Investments	10320
	Unrealized Gain on Trading Investments		10320
(Mapco - (2400*48)-(141440*2400/3200) = 9120) (Swift - (1500*19)-27300 = 1200 Total unrealized gain = 9120+1200 = 10320
2017
Apr. 9	Investments-Corvair Inc.	71610
	Cash		71610
15-Jun	Cash	360
	Dividend Revenue		360
Aug. 30	Cash	13410
	Loss on Sale of Investments	1935
	Investments-Corvair Inc.		15345
Dec. 31	Unrealized Loss on Trading Investments	4145
	Valuation Allowance for Trading Investments		4145

2. Prepare the investment-related current asset balance sheet presentation for Ophir Investments Inc. on December 31, 2017.

Ophir Investments Inc.
Balance Sheet (selected Current Asset items)
31-Dec-17
Current Assets:
Trading Investments (at Cost)		189645
Less Valuation Allowance For Trading Investments		-4145
Trading Investments (at Fair Value)		185500