The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following: Assets: Investment...

The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following: Assets: Investment in IBM common shares $ 1,445,000 Less: Fair value adjustment (155,000 ) $ 1,290,000 No changes occurred during 2018 in the investment portfolio. Required: Prepare appropriate adjusting entry(s) at December 31, 2018, assuming the fair value of the IBM common shares was: $1,199,000 $1,299,000 $1,460,000

Solutions

Expert Solution

Part-1
Adjusting Entry
Account Tittle	Debit	Credit
Accumulated Unrealized holding Losses and Gains	$91000
Fair Value Adjustment		$91000

Working Note-1

Loss during Fair value Adjustment = Fair Value – Investment

= $1,1,99,000 - $ 1,445,000=$246000

Reserve Available= $155000

Additional Reserve required (246000-155000)=$91000

Part-2
Adjusting Entry
Account Tittle	Debit	Credit
Fair Value Adjustment	$9000
Accumulated Unrealized holding Losses and Gains		$9000

Working Note-2

Loss during Fair value Adjustment = Fair Value – Investment

= $1,2,99,000 - $ 1,445,000=$146000

Reserve Available= $155000

Existing Reserve Reduced by (155000-146000)=$9000

Part-3
Adjusting Entry
Account Tittle	Debit	Credit
Fair Value Adjustment	170000
Accumulated Unrealized holding Losses and Gains		170000

Working Note-3

Loss during Fair value Adjustment = Fair Value – Investment

= $1,4,60,000 - $ 1,445,000=$15000

Reserve Available= $155000

Unrealized Profit should be record (155000+15000)=$170000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following: Assets: Investment...

The accounting records of Jamaican Importers, Inc., at January 1, 2018, included the following: Assets: Investment in IBM common shares $ 1,395,000 Less: Fair value adjustment (150,000 ) $ 1,245,000 No changes occurred during 2018 in the investment portfolio. Required: Prepare appropriate adjusting entry(s) at December 31, 2018, assuming the fair value of the IBM common shares was: $1,187,000 $1,287,000 $1,425,000 (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

On January 1, 2018, the following information was drawn from the accounting records of Carter Company:...

On January 1, 2018, the following information was drawn from the accounting records of Carter Company: cash of $225; land of $1,875; notes payable of $525; and common stock of $945. Required a. Determine the amount of retained earnings as of January 1, 2018. b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $325 cash dividend to the stockholders. Can the company pay this dividend? c. As of January 1, 2018,...

The accounting records of Wall’s China Shop reflected the following balances as of January 1, 2018:...

The accounting records of Wall’s China Shop reflected the following balances as of January 1, 2018: Cash $ 17,700 Beginning inventory 19,110 (210 units @ $91) Common stock 15,500 Retained earnings 21,310 The following five transactions occurred in 2018: First purchase (cash) 120 units @ $93 Second purchase (cash) 195 units @ $101 Sales (all cash) 360 units @ $192 Paid $14,450 cash for salaries expense Paid cash for income tax at the rate of 25 percent of income before...

On January 1, 2018, the following information was drawn from the accounting records of Carter Company:...

On January 1, 2018, the following information was drawn from the accounting records of Carter Company: cash of $400; land of $2,400; notes payable of $700; and common stock of $1,540. Required a. Determine the amount of retained earnings as of January 1, 2018. b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $500 cash dividend to the stockholders. Can the company pay this dividend? c. As of January 1, 2018,...

The accounting records of Wall’s China Shop reflected the following balances as of January 1, 2018:...

The accounting records of Wall’s China Shop reflected the following balances as of January 1, 2018: Cash $ 17,600 Beginning inventory 18,200 (200 units @ $91) Common stock 15,400 Retained earnings 20,400 The following five transactions occurred in 2018: First purchase (cash) 120 units @ $93 Second purchase (cash) 200 units @ $101 Sales (all cash) 350 units @ $199 Paid $16,950 cash for salaries expense Paid cash for income tax at the rate of 25 percent of income before...

The accounting records of Wall’s China Shop reflected the following balances as of January 1, 2018:...

The accounting records of Wall’s China Shop reflected the following balances as of January 1, 2018: Cash $ 17,600 Beginning inventory 18,400 (200 units @ $92) Common stock 14,500 Retained earnings 21,500 The following five transactions occurred in 2018: First purchase (cash) 125 units @ $94 Second purchase (cash) 195 units @ $102 Sales (all cash) 355 units @ $190 Paid $15,700 cash for salaries expense Paid cash for income tax at the rate of 25 percent of income before...

On January 1, 2018, the following information was drawn from the accounting records of Carter Company:...

On January 1, 2018, the following information was drawn from the accounting records of Carter Company: cash of $800; land of $3,500; notes payable of $600; and common stock of $1,000. Required a. Determine the amount of retained earnings as of January 1, 2018. b. After looking at the amount of retained earnings, the chief executive officer (CEO) wants to pay a $1,000 cash dividend to the stockholders. Can the company pay this dividend? c. As of January 1, 2018,...

Waddell Company had the following balances in its accounting records as of December 31, 2018: Assets...

Waddell Company had the following balances in its accounting records as of December 31, 2018: Assets Liabilities and Equity Cash $ 54,000 Accounts Payable $ 23,000 Accounts Receivable 44,000 Common Stock 88,000 Land 31,000 Retained Earnings 18,000 Totals $ 129,000 $ 129,000 The following accounting events apply to Waddell Company’s 2019 fiscal year: Jan. 1 Acquired $52,000 cash from the issue of common stock. Feb. 1 Paid $5,400 cash in advance for a one-year lease for office space. Mar. 1...

The following information was obtained from the accounting records and financial statements of Palmer Inc. Assets...

The following information was obtained from the accounting records and financial statements of Palmer Inc. Assets 2019 2020 ∆ Cash $ 280,000 315,000 35,000 Accounts receivable 720,000 755,000 35,000 Inventory 855,000 800,000 (55,000) Capital assets 1,720,000 1,930,000 210,000 Accumulated depreciation (580,000) (550,000) 30,000 Net capital assets 1,140,000 1,380,000 240,000 Total 2,995,000 3,250,000 Liabilities and Stockholders’ equity Accounts payable 445,000 360,000 (85,000) Interest payable 60,000 75,000 15,000 Income taxes payable 40,000 50,000 10,000 Bonds payable 800,000 900,000 100,000 Common stocks 1,200,000...

The following information was obtained from the accounting records and financial statements of Fairbanks Inc. Assets...

The following information was obtained from the accounting records and financial statements of Fairbanks Inc. Assets 2019 2020 ∆ Cash $ 662,000 781,000 119,000 Accounts receivable 524,000 707,000 183,000 Raw materials inventory 404,000 521,000 117,000 Finished goods inventory 1,212,000 1,190,000 (22,000) Land 1,200,000 1,000,000 (200,000) Machinery and equipment 3,330,000 3,511,000 181,000 Accumulated depreciation (1,555,000) (1,725,000) (170,000) Net capital assets 1,775,000 1,786,000 11,000 Total 5,777,000 5,985,000 Liabilities and Stockholders’ equity Accounts payable 888,000 961,000 73,000 Wages payable 122,000 107,000 (15,000) Long-term...

Subjects