Question

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

Year 1
Feb. 14.	Purchased 3,500 shares of Apollo Inc. as a trading security at $39 per share plus a brokerage commission of $700.
Apr. 1.	Purchased 1,700 shares of Ares Inc. as a trading security at $16 per share plus a brokerage commission of $340.
June 1.	Sold 800 shares of Apollo Inc. for $40 per share less an $100 brokerage commission.
June 27.	Received an annual dividend of $0.12 per share on Apollo stock.
Dec. 31.	The portfolio of trading securities was adjusted to fair values of $43 and $17 per share for Apollo Inc. and Ares Inc., respectively.
Year 2
Mar. 14.	Purchased 1,500 shares of Athena Inc. as a trading security at $46 per share plus a $225 brokerage commission.
June 26.	Received an annual dividend of $0.15 per share on Apollo Inc. stock.
July 30.	Sold 300 shares of Athena Inc. for $40 per share less a $90 brokerage commission.
Dec. 31.	The portfolio of trading securities had a cost of $188,760 and fair value of $184,500, requiring a credit balance in Valuation Allowance for Trading Investments of $4,260 ($188,760 - $184,500). Thus, the debit balance from December 31, Year 1 is to be adjusted to the new balance.

Required:

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	Description	Debit	Credit
Year 1
Feb. 14	Investments-Apollo Inc.
	Cash
Apr. 1	Investments-Ares Inc.
	Cash
June 1	Cash
	Gain on Sale of Investments
	Investments-Apollo Inc.
June 27	Cash
	Dividend Revenue
Dec. 31
Year 2
Mar. 14
June 26
July 30
Dec. 31

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

Zeus Investments Inc. Balance Sheet (selected items) December 31, Year 2
Current Assets:

3. How are unrealized gains or losses on trading investments presented in the financial statements of Zeus Investments Inc.?

Unrealized gains or losses are reported in the , often as .

Answer 1

1) Journal Entries :

Date	Accounts Titles	Debit $	Credit $
Yr 1
14-Feb	Investments-Apollo Inc.	137200
	Cash		137200
1-Apr	Investments-Ares Inc.	27540
	Cash		27540
1-Jun	Cash	31900
	Investment-Apollo Inc.		31200
	Gain on sale of investments		700
27-Jun	Cash	324
	Dividend Revenue		324
31-Dec	Trading Securities	12500
	Allowance for Trading Investments		12500
Yr 2
14-Mar	Investments-Athena Inc.	68225
	Cash		68225
26-Jun	Cash	405
	Dividend revenue		405
30-Jul	Cash	11910
	Loss on sale	1890
	Investments-Athena Inc.		13800
31-Dec	Allowance for Trading Investments	4260
	Trading Securities		4260

2) Abstract of current assets :

Current Assets:
Trading Securities	$184500

3) the unrealised gain of the Trading Securities :

Liabilities :
Allowance for Trading Investments (12500 - 4260) ie. unrealised gains	$8240