Question

Exercise 17-11 (Part Level Submission)
Marin Corporation made the following cash purchases of securities during 2017, which is the first year in which Marin invested in securities. 1.
On January 15, purchased 10,140 shares of Sanchez Company’s common stock at $40.20 per share plus commission $2,120. 2.
On April 1, purchased 5,140 shares of Vicario Co.’s common stock at $62.40 per share plus commission $3,510. 3.
On September 10, purchased 7,140 shares of WTA Co.’s preferred stock at $31.80 per share plus commission $5,050.
On May 20, 2017, Marin sold 4,140 shares of Sanchez Company’s common stock at a market price of $42 per share less brokerage commissions, taxes, and fees of $3,990. The year-end fair values per share were Sanchez $36, Vicario $66, and WTA $33.60. In addition, the chief accountant of Marin told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases.
(c)
Compute the unrealized gains or losses

Answer 1

Solution c:

Computation of unrealised gain (loss)
Particulars	Sanchez Company	Vicario's company	WTA Co	Total
Number of shares purchased	10140	5140	7140
Purchase price	$40.20	$62.40	$31.80
Purchase value	$407,628.00	$320,736.00	$227,052.00	$955,416.00
Commission	$2,120.00	$3,510.00	$5,050.00	$10,680.00
Total Purchase Cost	$409,748.00	$324,246.00	$232,102.00	$966,096.00
Number of shares sold	4140	0	0
Cost of shares sold (Purchase cost * number of shares sold / Nos of shares purchased)	$167,293.56	$0.00	$0.00	$167,293.56
Balance number of shares at year end	6000	5140	7140
Holding cost of balance of number of shares (Purchase cost - Cost of shares sold)	$242,454.44	$324,246.00	$232,102.00	$798,802.44
Fair value per share at year end	$36.00	$66.00	$33.60
Fair value of shares at year end (Fair value per share * Nos of balance shares)	$216,000.00	$339,240.00	$239,904.00	$795,144.00
Unrealized gain or (Losses) (Fair Value - Holding cost)	-$26,454.44	$14,994.00	$7,802.00	-$3,658.44