In: Accounting
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, @ $45 less fees of $1,200. | |
April 1 | Bought 700 shares of Earnhart Corp., Common, @ $75 plus fees of $1,300. |
Tamarisk’s portfolio of equity securities appeared as follows on
December 31, 2018.
Investments |
Cost |
Fair Value |
||
5,000 shares of Wallace Corp., Common | $172,900 | $167,700 | ||
700 shares of Earnhart Corp., Common | 53,800 | 50,100 | ||
400 shares of Martin, Inc., Preferred | 63,500 | 61,700 | ||
$290,200 | $279,500 |
Prepare the general journal entries for Tamarisk Company
for:
(a) | The 2017 adjusting entry. | |
(b) | The sale of the Gordon stock. | |
(c) | The purchase of the Earnhart stock. | |
(d) | The 2018 adjusting entry for the trading portfolio. |
Journal Entries :
Req. | Date | Accounts Titles and explanations | Debit $ | Credit $ |
a | Dec 31 2017 | Unrealised loss on revaluation to FV | 9600 | |
Investments for sale | 9600 | |||
(being revaluation of Gordon equity 77600-73200=4400 & Wallace 172900 - 167700=5200) | ||||
Dec 31 2017 | Investment for sale | 1600 | ||
Unrealised gain on revaluation to FV | 1600 | |||
(being revaluation of Martin equity 63500-65100=1600) | ||||
b | March 1 2018 | Cash | 66300 | |
Loss on sale of Investment | 6900 | |||
Investment for Sale | 73200 | |||
(being sale of Gordon 1500 shares and loss booked) | ||||
March 1 2018 | Loss on Sale of Investment | 4400 | ||
Unrealised loss on revaluation to FV | 4400 | |||
(being the unrealised loss got realised on Gordon) | ||||
c | Apr 1 2018 | Investment for Sale | 51200 | |
Cash | 51200 | |||
(being purchase of Earnhart equity 700*75-1300 ) | ||||
d | Dec 31 2018 | Unrealised loss on revaluation to FV | 8900 | |
Investment | 8900 | |||
(being revaluation of Wallace equity 172900-167700=5200, Earnhart 53800-50100=3700 ) | ||||
Dec 31 2018 | Unrealised loss on revaluation to FV | 200 | ||
Unrealised gain on revaluation to FV | 1600 | |||
Investment for Sale | 1800 | |||
(being revaluation of Martin equity 63500-61700=1800) |