In: Accounting
Rios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Rios Financial Co., which has a fiscal year ending on December 31:
Record these transactions on page 10:
Year 1 |
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Feb. | 1. | Purchased 6,300 shares of Caldwell Inc. as a trading security at $41 per share plus a brokerage commission of $630. |
May | 1. | Purchased 1,700 shares of Holland Inc. as a trading security at $47 plus a brokerage commission of $187. |
July | 1. | Sold 3,280 shares of Caldwell Inc. for $39 per share less a $110 brokerage commission. |
31. | Received an annual dividend of $0.35 per share on Caldwell Inc. stock. | |
Dec. | 31. | The portfolio of trading securities was adjusted to fair values of $39 and $46 per share for Caldwell Inc. and Holland Inc., respectively. |
Record these transactions on page 11:
Year 2 |
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Apr. | 1. | Purchased 2,700 shares of Fuller Inc. as a trading security at $28 per share plus a $135 brokerage commission. |
July | 31. | Received an annual dividend of $0.40 per share on Caldwell Inc. stock. |
Oct. | 14. | Sold 540 shares of Fuller Inc. for $30 per share less a $55 brokerage commission. |
Dec. | 31 | The portfolio of trading securities had a cost of $264,797 and a fair value of $341,549, requiring a debit balance in Valuation Allowance for Trading Investments of $76,752 ($341,549 - $264,797). Thus, the credit balance from December 31, Year 1, is to be adjusted to the new balance. |
Required: | |||
1. | Journalize the entries to record these transactions. Round all final amounts to the nearest whole dollar.* | ||
2. | Prepare the investment-related current asset balance sheet presentation for Rios Financial Co. on December 31, Year 2.* | ||
3. | How are unrealized gains or losses on trading investments
presented in the financial statements of Rios Financial Co.?
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Accounting question
Rios Financial Co. is a regional insurance company that began operations on January 1, Year 1. The following transactions relate to trading securities acquired by Rios Financial Co., which has a fiscal year ending on December 31: