Question

In: Accounting

Investment in Trading Securities The Coca-Cola Company’s December 31, 2013, balance sheet reports investments in trading...

Investment in Trading Securities The Coca-Cola Company’s December 31, 2013, balance sheet

reports investments in trading securities at $372 million, with net unrealized gains of $12 million.

Required

a. How much did Coca-Cola pay for the trading securities reported on its 2013 balance sheet?

b. Where are unrealized gains and losses on trading securities reported in Coca-Cola’s nancial

statements?

c. Assume the trading securities on hand at the end of 2013 were acquired during 2013. Prepare the

summary journal entries made by Coca-Cola to record events related to these trading securities.

d. Assume the securities are sold for $370 million in 2014. Prepare the journal entry to record the sale.

Solutions

Expert Solution

Solution:

a) Amount paid for trading securities = Year End Balance Sheet Value - Net unrealized gain = $372 million - $12 million = $360 Million.

b) Unrealized Gain is reported in Income Statement and secondly same value is adjusted to trading securities in Balance Sheet.

c) Journal Entries at the time of investment and unrealized gain

Date Account title and explanation Debit Credit
2013 Trading Securities-Coca-Cola Company $ 360,000,000
Cash $ 360,000,000
( Being Investments made in trading securities)
2013 Trading Securities-Coca-Cola Company $    12,000,000
Unrealized gain on trading securities $    12,000,000
( Being Unrealized gain recorded)

d) Journal Entries at the time of securities sell

Date Account title and explanation Debit Credit
2014 Cash $ 370,000,000
Realized loss on trading securities $       2,000,000
Trading Securities-Coca-Cola Company $ 372,000,000
( Being trading securities sold and loss realized)

Note:

1) According to trading securities accounting, any change in value of investment at year end will be adjusted to investment value and such gain or loss will be recorded in income statement.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

At December 31, 2020, the investments in the portfolio of the trading securities of Mac Company...
At December 31, 2020, the investments in the portfolio of the trading securities of Mac Company included the following: Atlanta Corp. bonds, 5%, $100,000 face value, purchased on Oct. 1, 2020 at par Dallas Inc. bonds, 4%, $50,000 face value, purchased on July 1, 2020 at par Required: Record the receipt of quarterly interest from the Atlanta Corp. bonds on December 31, 2020. Record the receipt of semiannual interest from the Dallas Inc. bonds on December 31, 2020. Record the...
Boatwig, Corp. Balance Sheet December 31, 2013 and December 31, 2014 2013 Dr. Cr. 2014 Assets...
Boatwig, Corp. Balance Sheet December 31, 2013 and December 31, 2014 2013 Dr. Cr. 2014 Assets Cash $19,000 $71,000 Accounts Receivable                 66,000                 84,000 Inventory               185,000               184,000 Land               113,000                 67,000 Equipment               195,000               256,000 Accummulated Depreciation                (42,000)                (69,000) Total $536,000 $593,000 Liabilities and Stockholders' Equity Accounts Payable $44,000 $36,000 Bonds Payable               198,000               143,000 Common Stock               167,000               222,000 Retained Earnings               127,000               192,000 Total $536,000                         -                          ...
In 2013, TCCC introduced “Coca-Cola Life” to the family of Coca-Cola brands (i.e., Classic, Diet, and...
In 2013, TCCC introduced “Coca-Cola Life” to the family of Coca-Cola brands (i.e., Classic, Diet, and Zero). While Coke Life is available in the U.S., it has been gradually rebranded into “Coca-Cola Stevia” in some markets, including Australia (since 2017), New Zealand (since 2018), and Singapore (since 2018). Compare these two (2) branding strategies in terms of their potential to achieve stronger brand equity.
On January 1, 2019, a company's balance sheet reports its investments in debt securities as follows:...
On January 1, 2019, a company's balance sheet reports its investments in debt securities as follows: Assets Investment in HTM securities..... $207,544 Supporting information: The HTM securities are $200,000 face value securities purchased on January 1, 2017, at a yield of 4%. The securities have a 4-year total life and pay interest annually on December 31, at a coupon rate of 6%. Q: Investment in HTM securities reported on the December 31, 2019 balance sheet is: a. $203,846 b. $204,938...
The Rainbow Company’s income statement and comparative balance sheets as of December 31 of 2013 and...
The Rainbow Company’s income statement and comparative balance sheets as of December 31 of 2013 and 2012 follow: RAINBOW COMPANY Income Statement For the Year Ended December 31, 2013 Sales Revenue $750,000 Dividend Income 15,000 765,000 Cost of Goods Sold $440,000 Wages and Other Operating Expenses 130,000 Depreciation Expense 39,000 Patent Amortization Expense 7,000 Interest Expense 13,000 Income Tax Expense 44,000 Loss on Sale of Equipment 5,000 Gain on Sale of Investments (10,000) 668,000 Net Income $97,000 RAINBOW COMPANY Balance...
Oriole Company’s balance sheet at December 31, 2021, is presented below. Oriole Company Balance Sheet December...
Oriole Company’s balance sheet at December 31, 2021, is presented below. Oriole Company Balance Sheet December 31, 2021 Cash $13,680 Accounts payable $8,900 Accounts receivable 21,100 Common stock 21,800 Allowance for doubtful accounts (740) Retained earnings 13,330 Inventory 9,990 $44,030 $44,030 During January 2022, the following transactions occurred. Oriole uses the perpetual inventory method. Jan. 1 Oriole accepted a 4-month, 8% note from Betheny Company in payment of Betheny’s $4,800 account. 3 Oriole wrote off as uncollectible the accounts of...
Morgan Company’s balance sheet at December 31, 2019, is presented below. MORGAN COMPANY Balance Sheet December...
Morgan Company’s balance sheet at December 31, 2019, is presented below. MORGAN COMPANY Balance Sheet December 31, 2019 Cash $30,000 Accounts Payable $12,250 Inventory 30,500 Interest Payable 300 Prepaid Insurance 6,084 Notes Payable 60,000 Equipment 38,520 Owner’s Capital 32,554 $105,104 $105,104 During January 2020, the following transactions occurred. (Morgan Company uses the perpetual inventory system.) 1. Morgan paid $300 interest on the note payable on January 1, 2020. The note is due December 31, 2021. 2. Morgan purchased $240,000 of...
Oriole Company’s balance sheet at December 31, 2021, is presented below. Oriole Company Balance Sheet December...
Oriole Company’s balance sheet at December 31, 2021, is presented below. Oriole Company Balance Sheet December 31, 2021 Cash $13,680 Accounts payable $8,900 Accounts receivable 21,100 Common stock 21,800 Allowance for doubtful accounts (740) Retained earnings 13,330 Inventory 9,990 $44,030 $44,030 During January 2022, the following transactions occurred. Oriole uses the perpetual inventory method. Jan. 1 Oriole accepted a 4-month, 8% note from Betheny Company in payment of Betheny’s $4,800 account. 3 Oriole wrote off as uncollectible the accounts of...
Sheridan Company’s balance sheet at December 31, 2021, is presented below. Sheridan Company Balance Sheet December...
Sheridan Company’s balance sheet at December 31, 2021, is presented below. Sheridan Company Balance Sheet December 31, 2021 Cash $13,500 Accounts payable $8,300 Accounts receivable 20,600 Common stock 21,900 Allowance for doubtful accounts (860) Retained earnings 12,710 Inventory 9,670 $42,910 $42,910 During January 2022, the following transactions occurred. Sheridan uses the perpetual inventory method. Jan. 1 Sheridan accepted a 4-month, 8% note from Betheny Company in payment of Betheny’s $3,600 account. 3 Sheridan wrote off as uncollectible the accounts of...
Sheridan Company’s balance sheet at December 31, 2021, is presented below. Sheridan Company Balance Sheet December...
Sheridan Company’s balance sheet at December 31, 2021, is presented below. Sheridan Company Balance Sheet December 31, 2021 Cash $13,500 Accounts payable $8,300 Accounts receivable 20,600 Common stock 21,900 Allowance for doubtful accounts (860) Retained earnings 12,710 Inventory 9,670 $42,910 $42,910 During January 2022, the following transactions occurred. Sheridan uses the perpetual inventory method. Jan. 1 Sheridan accepted a 4-month, 8% note from Betheny Company in payment of Betheny’s $3,600 account. 3 Sheridan wrote off as uncollectible the accounts of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT