Swifty Corporation made the following cash purchases of securities during 2017, which is the first year...

Swifty Corporation made the following cash purchases of securities during 2017, which is the first year in which Swifty invested in securities. 1. On January 15, purchased 10,050 shares of Sanchez Company’s common stock at $40.20 per share plus commission $2,030. 2. On April 1, purchased 5,050 shares of Vicario Co.’s common stock at $62.40 per share plus commission $3,420. 3. On September 10, purchased 7,050 shares of WTA Co.’s preferred stock at $31.80 per share plus commission $4,960. On May 20, 2017, Swifty sold 4,050 shares of Sanchez Company’s common stock at a market price of $42 per share less brokerage commissions, taxes, and fees of $3,900. The year-end fair values per share were Sanchez $36, Vicario $66, and WTA $33.60. In addition, the chief accountant of Swifty told you that the corporation plans to hold these securities for the long-term but may sell them in order to earn profits from appreciation in prices. The equity method of accounting is not appropriate for these stock purchases.

Solutions

Expert Solution

Date	Account Tittle	Debit	Credit
15-Jan	Availble for Sale Securities- Sanchez	406040
	Cash ((10050X$40.20)+ $2030)		406040
	(Purchase of Securities - Common Stock)

01-Apr	Availble for Sale Securities- Vicario	318540
	Cash ((5050X$62.40)+$3420)		318540
	(Purchase of Securities - Common Stock)

10-Sep	Availble for Sale Securities- WTA Co.	229150
	Cash (7050X $31.80)+$4960		229150
	(Purchase of Securities - Preferred Stock)

	Journal Entries
Date	Account Tittle	Debit	Credit
20-May	Cash ((4050X$42)-$3900)	166200
	Availble for Sale Securities- Sanchez		163628
	Gain on Sales of Securrities {(($42- (406040/10050))X4050}-$3900		2572
	(Sale of Securities- Common Stock)

Calculation of Unrealized Gain /Loss

Sanchez

=(($36X(10050-4050))- ($406040-$163628))= ($26412)

Vicario

=($5050*$66)-$318540= $14760

WTA Co.

=(7050*$33.60)-$163628=$73252

ekkarill92 answered 1 year ago

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