Question

In: Accounting

Problem 17-06 Tamarisk Company has the following portfolio of investment securities at September 30, 2020, its...

Problem 17-06

Tamarisk Company has the following portfolio of investment securities at September 30, 2020, its most recent reporting date.

Investment Securities

Cost

Fair Value
Horton, Inc. common (5,120 shares) $220,160 $203,890
Monty, Inc. preferred (3,590 shares) 140,010 146,770
Oakwood Corp. common (960 shares) 173,760 172,690


On October 10, 2020, the Horton shares were sold at a price of $54 per share. In addition, 3,040 shares of Patriot common stock were acquired at $56 per share on November 2, 2020. The December 31, 2020, fair values were Monty $114,890, Patriot $139,880, and Oakwood $186,000.

Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Oct. 10, 2020Nov. 2, 2020Dec. 31, 2020

Oct. 10, 2020Nov. 2, 2020Dec. 31, 2020

Oct. 10, 2020Nov. 2, 2020Dec. 31, 2020

Solutions

Expert Solution

Cost

​Fair Value

FV Adjustment

Horton Inc

220160

203890

$ (16270)

Monty Inc

140010

146770

$ (6760)

Oakwood Inc

173760

172690

$ 1070

Total

$ (21960)

It is assumed there was no previous balance in the fair value adjustments account and fair values are of last quarter, thus there should be a credit balance of $21960 in the fair value adjustment account as on September 30

Cost

​Fair Value

FV Adjustment

Horton Inc

0

0

0

Monty Inc

140010

114890

$(25120)

Oakwood Inc

173760

186000

$12240

Patriot Inc

170240

139880

$ (30360)

$ (43240)

Previous Balance

$ (21960)

Adjustment needed

$ 21280

Journal Entries

10.10.2017

Cash

$ 276480

Investment in stock

$ 220160

Gain on sale

$ 56320

(To record sale of shares)

11.02.2017

Investment in Patriot Stock

$ 170240

Cash

$ 170240

(To record acquisition of shares)

12.31.2017

Unrealized Holding G/L

$ 21280

Fair Value Adjustment

$ 21280

(To record Fair value adjustment)

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Question 6 Bonita Company has the following portfolio of investment securities at September 30, 2020, its...
Question 6 Bonita Company has the following portfolio of investment securities at September 30, 2020, its most recent reporting date. Investment Securities Cost Fair Value Horton, Inc. common (5,490 shares) $230,580 $215,850 Monty, Inc. preferred (3,670 shares) 132,120 138,580 Oakwood Corp. common (920 shares) 171,120 170,090 On October 10, 2020, the Horton shares were sold at a price of $56 per share. In addition, 2,750 shares of Patriot common stock were acquired at $57 per share on November 2, 2020....
Tamarisk Company has the following securities in its portfolio on December 31, 2017. None of these...
Tamarisk Company has the following securities in its portfolio on December 31, 2017. None of these investments are accounted for under the equity method. Investments Cost Fair Value 1,500 shares of Gordon, Inc., Common $77,600 $73,200 5,000 shares of Wallace Corp., Common 172,900 167,700 400 shares of Martin, Inc., Preferred 63,500 65,100 $314,000 $306,000 All of the securities were purchased in 2017. In 2018, Tamarisk completed the following securities transactions. March 1 Sold the 1,500 shares of Gordon, Inc., Common,...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these...
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,...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these...
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,...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these...
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 $76,400 $72,200 5,000 shares of Wallace Corp., Common 184,100 179,300 400 shares of Martin, Inc., Preferred 56,200 57,800 $316,700 $309,300 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,...
Flint Company has the following securities in its portfolio on December 31, 2020. None of these...
Flint 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, Flint completed the following securities transactions. March 1 Sold the 1,500 shares of Gordon, Inc., Common,...
7.         Hadley Company has the following securities in its portfolio on December 31, 2020:            ...
7.         Hadley Company has the following securities in its portfolio on December 31, 2020:                                                                            Cost             Fair Value 15,000 shares of Brady Corp. Common         $450,000         $460,000 100 shares of Sanders, Inc. Common             115,000             90,000 2,000 shares of Peters, Inc. Preferred             210,000         195,000                                                                         $775,000         $745,000 All of the securities were purchased in 2020. In 2021, Hadley completed the following securities transactions: March 1           Sold 5,000 shares of Brady, Corp. Common for $170,000...
Vaughn Company has the following securities in its investment portfolio on December 31, 2017 (all securities...
Vaughn Company has the following securities in its investment portfolio on December 31, 2017 (all securities were purchased in 2017): (1) 3,100 shares of Anderson Co. common stock which cost $55,800, (2) 9,600 shares of Munter Ltd. common stock which cost $547,200, and (3) 6,100 shares of King Company preferred stock which cost $250,100. The Fair Value Adjustment account shows a credit of $10,900 at the end of 2017. In 2018, Vaughn completed the following securities transactions. 1. On January...
enCo has the following securities in its investment portfolio on December 31, 2014. All these securities...
enCo has the following securities in its investment portfolio on December 31, 2014. All these securities were purchased in 2014. 800 shares of Benson Inc. common shares, which cost $50,400 and had a fair value of $52,300 at the end of 2014. JenCo accounts for this investment as available for sale. 3,000 shares of Southgate Inc. common stock, which cost $174,000 and had a fair value of $204,000 at the end of 2014. JenCo accounts for this investment as available...
Question 1 Sandhill Company has the following securities in its portfolio on December 31, 2020. None...
Question 1 Sandhill 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 $75,700 $71,000 5,000 shares of Wallace Corp., Common 185,100 180,200 400 shares of Martin, Inc., Preferred 61,900 63,700 $322,700 $314,900 All of the securities were purchased in 2020. In 2021, Sandhill completed the following securities transactions. March 1 Sold the 1,500 shares of Gordon,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT