Question

GENERAL JOURNAL HAVE 14 ENTRIES

The investment manager of 4th National Bank invests some of the bank’s financial resources in trading securities. During the last quarter of 2018, the following transactions occurred in regard to these trading securities:

Nov. 5	Purchased 200 shares of Morgan Company common stock at $86 per share.
19	Purchased 300 shares of Parker Company preferred stock at $63 per share.
29	Sold 100 shares of Morgan Company common stock at $89 per share.
Dec. 15	Purchased 400 shares of Tathem Company common stock at $37 per share.
17	Sold 100 shares of Parker Company preferred stock at $62 per share.

On December 31, 2018, the market values of the shares were as follows: Morgan, $87 per share; Parker, $61 per share; and Tathem, $37.25 per share. The bank held no trading securities at the beginning of the last quarter of 2018.

Required:

1.	Prepare journal entries to record the preceding information.
2.	Show what the bank reports on its fourth quarter 2018 income statement for these trading securities.
3.	Show how the bank reports these trading securities on its December 31, 2018, balance sheet. ASSETS 111 Cash 113 Investment in Trading Securities 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue 431 Interest Income 434 Gain on Sale of Trading Securities EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 599 Loss on Sale of Trading Securities 912 Unrealized Holding Gain/Loss: Trading Securities 915 Income Tax Expense

Answer 1