Question

Carlsville Company, which began operations in 2015, invests its idle cash in trading securities. The following transactions are from its short-term investments in trading securities.

2015
Jan.	20		Purchased 800 shares of Ford Motor Co. at $26 per share plus a $125 commission.
Feb.	9		Purchased 2,200 shares of Lucent at $44.25 per share plus a $578 commission.
Oct.	12		Purchased 750 shares of Z-Seven at $7.50 per share plus a $200 commission.
Dec.	31		Fair value of the short-term investments in trading securities is $130,000.

2016
Apr.	15		Sold 800 shares of Ford Motor Co. at $29 per share less a $285 commission.
July	5		Sold 750 shares of Z-Seven at $10.25 per share less a $102.50 commission.
July	22		Purchased 1,600 shares of Hunt Corp. at $30 per share plus a $444 commission.
Aug.	19		Purchased 1,800 shares of Donna Karan at $18.25 per share plus a $290 commission.
Dec.	31		Fair value of the short-term investments in trading securities is $160,000.

2017
Feb.	27		Purchased 3,400 shares of HCA at $34 per share plus a $420 commission.
Mar.	3		Sold 1,600 shares of Hunt at $25 per share less a $250 commission.
June	21		Sold 2,200 shares of Lucent at $42 per share less a $420 commission.
June	30		Purchased 1,200 shares of Black & Decker at $47.50 per share plus a $595 commission.
Nov.	1		Sold 1,800 shares of Donna Karan at $18.25 per share less a $309 commission.
Dec.	31		Fair value of the short-term investments in trading securities is $180,000.

Required:

1.

Prepare journal entries to record these short-term investment activities for the years shown. On December 31 of each year, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities.(If no entry is required select No journal entry required in the first entry field. Do not round your intermediate calculations.)

1a. Jan 20 - Purchased 800 shares of Ford Motor Co. at $26 per share plus a $125 commission. 1b. Feb 09 - Purchased 2,200 shares of Lucent at $44.25 per share plus a $578 commission. 1c. Oct 12 - Purchased 750 shares of Z-Seven at $7.50 per share plus a $200 commission. 1d. Dec 31 - Record the unrealized gain or loss on short term investment. 1e. Apr 15 - Sold 800 shares of Ford Motor Co. at $29 per share less a $285 commission. 1f. Jul 05 - Sold 750 shares of Z-Seven at $10.25 per share less a $102.50 commission. 1g. Jul 22 - Purchased 1,600 shares of Hunt Corp. at $30 per share plus a $444 commission. 1h. Aug 19 - Purchased 1,800 shares of Donna Karan at $18.25 per share plus a $290 commission. 1i. Dec 31 - Record the unrealized gain or loss on short term investment. 1j. Feb 27 - Purchased 3,400 shares of HCA at $34 per share plus a $420 commission. 1k. Mar 03 - Sold 1,600 shares of Hunt at $25 per share less a $250 commission. 1l. Jun 21 - Sold 2,200 shares of Lucent at $42 per share less a $420 commission. 1m. Jun 30 - Purchased 1,200 shares of Black & Decker at $47.50 per share plus a $595 commission. 1n. Nov 01 - Sold 1,800 shares of Donna Karan at $18.25 per share less a $309 commission. 1o. Dec 31 - Record the unrealized gain or loss on short term investment.

Answer 1

Date	General Journal	Debit	Credit
2015
20-Jan	Short term investment-Ford company	20925
	Cash		20925
	800*26+125
09-Feb	Short term investment-Ford company	97928
	Cash		97928
	(2200*44.25)+578
12-Oct	Short term investment-Ford company	5825
	Cash		5825
	(750*7.5)+200
31-Dec	Fair Value adjustment-trading	5322
	Unrealised Gain		5322
	130000-20925-97928-5825
2016
15-Apr	Cash
	Short term investment-Ford company	22915
	Gain on short term investment		22915
	800*29-285
05-Jul	Cash	7585
	Short term investment-Z-seven		5825
	Gain on short term investment		1760
	750*10.25-102.5
22-Jul	Short term investment-Hunt	48444
	Cash		48444
	1600*30+444
19-Aug	Short term investment-Donna Karren	33140
	Cash		33140
	1800*18.25+290
31-Dec	Unrealised Loss	47916
	Fair value adjustment- trading		47916
	160000-22915-7585-48444-33140
2017
27-Feb	Short term investment-HCA	116020
	Cash		116020
	3400*34+420
03-Mar	Cash	39750
	Loss on sale of Short term investment	8694
	Short term investment hunt		48444
	1600*25-250
21-Jun	Cash	91980
	Loss on sale of Short term investment	5948
	Short term investment-lucent		97928
	2200*42-420
30-Jun	Short term investment-Black & Decker	57595
	Cash		57595
	1200*47.5+595
01-Nov	Cash	32541
	Loss on sale of Short term investment	599
	Short term investment-Donna Karan		33140
	1800*18.25-309
31-Dec	Unrealized loss	18449
	Fair value adjustment- Trading		18449