Question

Required information

Problem 15-3A Recording, adjusting, and reporting long-term available-for-sale securities LO P3

[The following information applies to the questions displayed below.]

Grass Security, which began operations in 2017, invests in long-term available-for-sale securities. Following is a series of transactions and events determining its long-term investment activity.

2017

Jan.		20		Purchased 2,900 shares of Johnson & Johnson at $22.40 per share plus a $430 commission.
Feb.		9		Purchased 3,100 shares of Sony at $48.10 per share plus a $415 commission.
June		12		Purchased 3,400 shares of Mattel at $28.90 per share plus a $385 commission.
Dec.		31		Per share fair values for stocks in the portfolio are Johnson & Johnson, $23.40; Mattel, $32.80; and Sony, $39.90.

2018

Apr.		15		Sold 2,900 shares of Johnson & Johnson at $25.40 per share less a $715 commission.
July		5		Sold 3,400 shares of Mattel at $25.80 per share less a $425 commission.
July		22		Purchased 2,500 shares of Sara Lee at $24.40 per share plus a $670 commission.
Aug.		19		Purchased 2,800 shares of Eastman Kodak at $18.90 per share plus a $388 commission.
Dec.		31		Per share fair values for stocks in the portfolio are: Kodak, $21.15; Sara Lee, $21.90; and Sony, $36.90.

2019

Feb.		27		Purchased 4,300 shares of Microsoft at $68.90 per share plus a $715 commission.
June		21		Sold 3,100 shares of Sony at $49.90 per share less a(n) $1,070 commission.
June		30		Purchased 3,300 shares of Black & Decker at $37.90 per share plus a $625 commission.
Aug.		3		Sold 2,500 shares of Sara Lee at $18.15 per share less a $625 commission.
Nov.		1		Sold 2,800 shares of Eastman Kodak at $24.65 per share less a(n) $815 commission.
Dec.		31		Per share fair values for stocks in the portfolio are: Black & Decker, $40.90; and Microsoft, $70.90.

Required:
1. Prepare journal entries to record these transactions and events and any year-end fair value adjustments to the portfolio of long-term available-for-sale securities.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Dec 31 2017	No of Shares	Share price on 31 Dec 17	Fair Value	Cost	Unrealized Gain/(Loss)
				Pur Price+Commission
Johnson and Johnson	2900	$                                 23.40	$        67,860	$                            65,390	$                               2,470
Sony	3100	$                                 39.90	$      123,690	$                          149,525	$                           -25,835
Mattel	3400	$                                 32.80	$      111,520	$                            98,645	$                             12,875
Total	9400		$      303,070	$                          313,560	$                           -10,490
Dec 31 2018	No of Shares	Share price on 31 Dec 18	Fair Value	Cost	Unrealized Gain/(Loss)
Kodak	2800	$                                 21.15	$        59,220	$                            53,308	$                               5,912
Sara lee	2500	$                                 21.90	$        54,750	$                            61,670	$                             -6,920
Sony	3100	$                                 36.90	$      114,390	$                          149,525	$                           -35,135
Total	8400		$      228,360	$                          264,503	$                           -36,143
Dec 31 2019	No of Shares	Share price on 31 Dec 19	Fair Value	Cost	Unrealized Gain/(Loss)
Black and Decker	3300	$                                 40.90	$      134,970	$                          125,695	$                               9,275
Mocrosoft	4300	$                                 70.90	$      304,870	$                          296,985	$                               7,885
Total	7600		$      439,840	$                          422,680	$                             17,160
Balance Sheet Presentation
		$                                 2,017	$          2,018	$                              2,019
Long Term AFS Securities (Cost)		$                             313,560	$      264,503	$                          422,680
Fair Value Adjustment		$                              -10,490	$      -36,143	$                            17,160
Long Term AFS Securities (Fair Value)		$                             303,070	$      228,360	$                          439,840
Realized Gain/(Loss)
		$                                 2,017	$          2,018	$                              2,019
Sale of Johnson and Johnson Shares	((2900*25.4)-715)-65390		$          7,555
Sale of Mattle Shares	((3400*25.8)-425)-98645		$      -11,350
Sale of Sara lee Shares	((2500*18.15)-625)-61670			$                          -16,920
Sale of Sony Shares	((3100*49.9)-1070)-149525			$                              4,095
Sale of Eastman Kodak Shares	((2800*24.65)-815)-53308			$                            14,897
Realized Gain/(Loss)		$                                        -	$         -3,795	$                              2,072
Unrealized Gain/(Loss)
		$                                 2,017	$          2,018	$                              2,019
Beginning of Year Debit/(Credit)			$      -10,490	$                          -36,143
Ending of Year Debit/(Credit)		$                              -10,490	$      -36,143	$                            17,160
Required adj Unrealized Gain/(Loss)		$                              -10,490	$      -25,653	$                            53,303
Journal Entries:
Date	Account	Debit	Credit
2017
Jan 20	Long Term Investment-J&J	$                               65,390
	Cash		$        65,390
Feb 9	Long Term Investment-Sony	$                             149,525
	Cash		$      149,525
Jun 12	Long Term Investment-Mettle	$                               98,645
	Cash		$        98,645
Dec 31	Unrealized Loss-Equity	$                               10,490
	Fair Value Adjustment-AFT (LT)		$        10,490
2018
Apr 15	Cash	$                               72,945
	Long Term Investment-J&J		$        65,390
	Gain on sale of LT investment		$          7,555
Jul 5	Cash	$                               87,295
	Loss on Sale of LT Investment	$                               11,350
	Long Term Investment-J&J		$        98,645
Jul 22	Long Term Investment-Sara Lee	$                               61,670
	Cash		$        61,670
Aug 19	Long Term Investment-Kodak	$                               53,308
	Cash		$        53,308
Dec 31	Unrealized Loss-Equity	$                               25,653
	Fair Value Adjustment-AFT (LT)		$        25,653
2019
Feb 27	Long Term Investment-Microsoft	$                             296,985
	Cash		$      296,985
Jun 21	Cash	$                             153,620
	Long Term Investment-Sony		$      149,525
	Gain on sale of LT investment		$          4,095
Jun 30	Long Term Investment-B&D	$                             125,695
	Cash		$      125,695
Aug 3	Cash	$                               44,750
	Loss on Sale of LT Investment	$                               16,920
	Long Term Investment-Sara Lee		$        61,670
Nov 1	Cash	$                               68,205
	Gain on Sale of LT Investment		$        14,897
	Long Term Investment-Kodak		$        53,308
Dec 31	Fair Value Adjustment-AFT (LT)	$                               53,303
	Unrealized Gain-Equity		$        53,303