In: Accounting
Ayayai Company has the following securities in its portfolio on
December 31, 2020. None of these investments are accounted for
under the equity method.
Investments |
Cost |
Fair Value |
||
1,500 shares of Gordon, Inc., Common | $72,500 | $68,500 | ||
5,000 shares of Wallace Corp., Common | 176,300 | 171,700 | ||
400 shares of Martin, Inc., Preferred | 63,300 | 64,800 | ||
$312,100 | $305,000 |
All of the securities were purchased in 2020.
In 2021, Ayayai completed the following securities
transactions.
March 1 | Sold the 1,500 shares of Gordon, Inc., Common, @ $45 less fees of $1,200. | |
April 1 | Bought 700 shares of Earnhart Corp., Common, @ $75 plus fees of $1,300. |
Ayayai’s portfolio of equity securities appeared as follows on
December 31, 2021.
Investments |
Cost |
Fair Value |
||
5,000 shares of Wallace Corp., Common | $176,300 | $171,700 | ||
700 shares of Earnhart Corp., Common | 53,800 | 50,100 | ||
400 shares of Martin, Inc., Preferred | 63,300 | 61,300 | ||
$293,400 | $283,100 |
Prepare the general journal entries for Ayayai Company
for:
(a) | The 2020 adjusting entry. | |
(b) | The sale of the Gordon stock. | |
(c) | The purchase of the Earnhart stock. | |
(d) | The 2021 adjusting entry for the trading portfolio. |