Question

Stock Investment Transactions, Trading Securities

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 3,100 shares of Apollo Inc. as a trading security at $30 per share plus a brokerage commission of $620.
Apr. 1.	Purchased 1,500 shares of Ares Inc. as a trading security at $12 per share plus a brokerage commission of $300.
June 1.	Sold 700 shares of Apollo Inc. for $31 per share less an $90 brokerage commission.
June 27.	Received an annual dividend of $0.14 per share on Apollo Inc. stock.
Dec. 31.	The portfolio of trading securities was adjusted to fair values of $34 and $13 per share for Apollo Inc. and Ares Inc., respectively.
Year 2
Mar. 14.	Purchased 1,400 shares of Athena Inc. as a trading security at $35 per share plus a $210 brokerage commission.
June 26.	Received an annual dividend of $0.17 per share on Apollo Inc. stock.
July 30.	Sold 300 shares of Athena Inc. for $29 per share less a $90 brokerage commission.
Dec. 31.	The portfolio of trading securities had a cost of $129,445 and a fair value of $125,300, requiring a credit balance in Valuation Allowance for Trading Investments of $4,145 ($129,445 - $125,300). 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
Apr. 1
June 1
June 27
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 income statement , often as Other Income (Losses) .

Answer 1

Ans 1

Ans 2

Ans 3

Unrealized gain or loss on trading investments are presented on the Income Statement under the head 'Other Income (Losses)' after the operating Income.

It will disclose $10,320 as other income in Year 1 and loss of $14,465 in Year 2.