Question

In: Accounting

On December 31, 2016, Monty Corp. provided you with the following pre-adjustment information regarding its portfolio...

On December 31, 2016, Monty Corp. provided you with the following pre-adjustment information regarding its portfolio of investments held for short-term profit-taking.

December 31, 2016

Investments Carrying Amount Fair Value

Moonstar Corp. shares $20,000 $18,600

Bilby Corp. shares $10,000 $8,800

Radius Ltd. Shares $19,600 $20,200

Total portfolio: $49,600 $47,600

During 2017, the Bilby Corp. shares were sold for $9,500 and Springs Ltd. shares were purchased for $9,000 plus 1% commission. The fair values on December 31,2017 were as follows: Moonstar Corp. shares $19,700, Radius Ltd. shares $21,000 and Springs Ltd. shares $8,600. Dividends and other investment income and losses are all reported in one investment income account.

Required:

a) Prepare the adjusting journal entry needed at December 31, 2016

b) Prepare the journal entries to record the sale of the Bilby Corp. shares and purchase of Springs Ltd. shares during 2017.

c) Prepare the adjusting journal entries needed on December 31, 2017

Solutions

Expert Solution

Date Account title and Explanation Debit ($) Credit ($)
31-12-2016 Unrealised loss on trading securities 1400
         Moonstar Corp. Shares ($20000 - $18600) 1400
To record the loss or the difference between carrying value and Fair value
Unrealised loss on trading securities 1200
            Bildy Corp. Shares ($10000 - $8,800) 1200
To record the loss or the difference between carrying value and Fair value
Radius Ltd. Shares ($20,200 - $19600) 600
          Unrealised Gain on trading securities 600
To record the gain on Increase in value (or) Difference between Fair value and Carrying value
2017 Bank 9500
      Bildy Corp. Shares 8800
      Unrealised gain 700
To record the sale of Bildy Corp shares
Spring Ltd. Shares ($9000+0.01*9000) 9090
       Cash 9090
To record the purchase of securities with commision
31-12-2017 Moonstar Corp. Shares (19700-18600) 1100
          Unrealised Gain on trading securities 1100
To record the gain on Increase in value (or) Difference between Fair value and Carrying value
Radius Ltd. Shares ($21000-$20200) 800
          Unrealised Gain on trading securities 800
To record the gain on Increase in value (or) Difference between Fair value and Carrying value
Unrealised loss on trading securities 490
            Spring Ltd. Shares ($9090-8600) 490
To record the loss or the difference between carrying value and Fair value

ekkarill92 answered 1 hour ago
Next > < Previous

Related Solutions

Monty Corporation has provided the following information for the year ended December 31, 2020. Monty Corporation...
Monty Corporation has provided the following information for the year ended December 31, 2020. Monty Corporation Income Statement For the Year Ended December 31, 2020 Revenue          Service Revenue 102,500          Dividend Revenue 11,000 $113,500 Operating Expenses          Supplies Expense 2,200          Depreciation Expense 20,900          Advertising Expense 1,000          Meals and Entertainment Expense 6,000          Rent Expense 9,400          Litigation Expense 8,300          Salaries and Wages Expense 40,600          Warranty Expense 4,100 92,500 Operating Income before income tax $21,000 Additional Information: 1. Monty is privately owned, and uses ASPE....
Question 5 Monty Corp.’s balance sheet at December 31, 2016, is presented below. MONTY CORP. Balance...
Question 5 Monty Corp.’s balance sheet at December 31, 2016, is presented below. MONTY CORP. Balance Sheet December 31, 2016 Cash $33,500 Accounts payable $13,800 Inventory 30,050 Interest payable 2,425 Prepaid insurance 5,600 Bonds payable 48,500 Equipment 39,000 Common stock 25,400 Retained earnings $18,025 $108,150 $108,150 During 2017, the following transactions occurred. Monty uses a perpetual inventory system. 1. Monty paid $2,425 interest on the bonds on January 1, 2017. 2. Monty purchased $244,300 of inventory on account. 3. Monty...
Monty Company reported the following amounts in the stockholders’ equity section of its December 31, 2016,...
Monty Company reported the following amounts in the stockholders’ equity section of its December 31, 2016, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 1,800 shares issued) $180,000 Common stock, $5 par (94,000 shares authorized, 18,800 shares issued) 94,000 Additional paid-in capital 131,000 Retained earnings 478,000 Total $883,000 During 2017, Monty took part in the following transactions concerning stockholders’ equity. 1. Paid the annual 2016 $10 per share dividend on preferred stock and a $2 per share dividend...
Monty Company reported the following amounts in the stockholders’ equity section of its December 31, 2016,...
Monty Company reported the following amounts in the stockholders’ equity section of its December 31, 2016, balance sheet. Preferred stock, 9%, $100 par (10,000 shares authorized, 1,800 shares issued) $180,000 Common stock, $5 par (101,500 shares authorized, 20,300 shares issued) 101,500 Additional paid-in capital 130,000 Retained earnings 486,000    Total $897,500 During 2017, Monty took part in the following transactions concerning stockholders’ equity. 1. Paid the annual 2016 $9 per share dividend on preferred stock and a $2 per share dividend...
On December 31, 2016, Robey Company accumulated the following information for 2016 in regard to its...
On December 31, 2016, Robey Company accumulated the following information for 2016 in regard to its defined benefit pension plan: Service cost $95,020 Interest cost on projected benefit obligation 11,110 Expected return on plan assets 10,770 Amortization of prior service cost 2,120 On its December 31, 2015, balance sheet, Robey had reported an accrued/prepaid pension cost liability of $13,850. Required: 1. Compute the amount of Robey’s pension expense for 2016. 2. Prepare all the journal entries related to Robey’s pension...
Monty Corporation had the following portfolio of investments at December 31, 2017, that qualified and were...
Monty Corporation had the following portfolio of investments at December 31, 2017, that qualified and were accounted for using the FV-OCI method: Quantity Percent Interest Cost per Share Fair Value per Share Frank Inc. 2,300 shares 8% $10 $16 Ellis Corp. 4,900 shares 14% 24 21 Mendota Ltd. 4,000 shares 2% 30 24 Early in 2018, Monty sold all the Frank Inc. shares for $17 per share, less a 1% commission on the sale. On December 31, 2018, Monty’s portfolio...
On December 21, 2020, Bridgeport Company provided you with the following information regarding its equity investments....
On December 21, 2020, Bridgeport Company provided you with the following information regarding its equity investments. Securities Cost Fair Value Unrealized Gain (Loss) SC Corp. stock $39,100 34,980 $(4,120 ) True Co. stock 53,500 60,060 6,560 Plus, Inc. stock 30,400 30,124 (276 ) Total of portfolio $123,000 $125,164 2,164 Previous fair value adjustment balance -0- Fair value adjustment – Dr. $2,164 During 2021, the Plus, Inc. stock was sold for $30,940. The fair value of the stock on December 31,...
On December 21, 2017, Nash Company provided you with the following information regarding its equity investments....
On December 21, 2017, Nash Company provided you with the following information regarding its equity investments. December 31, 2017 Investments (Trading) Cost Fair Value Unrealized Gain (Loss) Clemson Corp. stock $19,900 $19,000 $(900 ) Colorado Co. stock 10,100 9,100 (1,000 ) Buffaloes Co. stock 19,900 20,460 560 Total of portfolio $49,900 $48,560 (1,340 ) Previous fair value adjustment balance 0 Fair value adjustment—Cr. $(1,340 ) During 2018, Colorado Company stock was sold for $9,590. The fair value of the stock...
36. Below is information for Dakota Corp. for 2016 and 2017: Bonds payable, December 31, 2016  ...
36. Below is information for Dakota Corp. for 2016 and 2017: Bonds payable, December 31, 2016   $500,000 Bonds payable, December 31, 2017   800,000 Loss on bond retirement—2017   15,000 Interest expense on bonds—2017   45,000 At the end of 2017, Dakota issued bonds at par value for $800,000 cash. The proceeds from these bonds were used to retire the $500,000 bond issue outstanding at the end of 2017 (before their maturity date). All interest expense was paid in cash during 2017. The...
Emerge Corp. reported the following amounts in the shareholders’ equity section of its December 31, 2016...
Emerge Corp. reported the following amounts in the shareholders’ equity section of its December 31, 2016 statement of financial position: Preferred shares, $8 dividend (10,000 shares authorized, 2,000 shares issued) $ 200,000 Common shares (unlimited authorized, 25,000 issued) 600,000 Contributed surplus 55,000 Retained earnings 250,000 Accumulated other comprehensive income 75,000 Total $1,180,000 During 2017, the company had the following transactions that affect shareholders’ equity. 1. Paid the annual 2016 $8 per share dividend on preferred shares and a $3 per...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT