Question

TraderTrader

Investments completed the following investment transactions during 2018:

Requirement 1. Journalize Trader's investment transactions. Explanations are not required. ?(Record debits? first, then credits. Exclude explanations from journal entries.

Jan.? 14: Purchased 900 shares of Velcon ?stock, paying $55 per share. The investment represents 2% ownership in Velcon's voting stock.

Trader does not have significant influence over Velcon.

Trader intends to hold the investment for the indefinite future.

Date			Accounts	Debit	Credit
Jan. 14			Unrealized Holding Gain—Available-for-Sale	49,500
			Cash

Aug.? 22: Received a cash dividend of $ 0.34 per share on the Velcon stock.

Date			Accounts	Debit	Credit
Aug. 22			Cash	306
			Dividend Revenue

Dec.? 31: Adjusted the investment to its current market value of $53 per share.

Date			Accounts	Debit	Credit
Dec. 31			Cash	47,700
			Loss on Disposal	1,800
			Unrealized Holding Loss—Available-for-Sale		49,500

Dec.? 31: Velcon reported net income of $180,000 for the year ended 2018.

Date			Accounts	Debit	Credit
Dec. 31			No entry required

Requirement 2. Classify and prepare a partial balance sheet for Trader?'s Velcon investment as of December? 31, 2018.

?(Use a minus sign or parentheses to enter a loss. If a box is not used in the balance? sheet, leave the box? empty; do not select a label or enter a? zero.)

Trader Investments
Balance Sheet (Partial)
December 31, 2018
Current Assets:
Long-term Assets:
Stockholders' Equity
Accumulated Other Comprehensive Income:

Requirement 3. Prepare a partial income statement for Trader Investments for year ended December? 31, 2018.

?(Use a minus sign or parentheses to enter a? loss.)

Trader Investments
Income Statement (Partial)
For the Year Ended December 31, 2018
Other Income and (Expenses):

Answer 1

Date	Accounts Title	Dr	Cr
14-Jan	Investment in AFS Securities	$49,500
	Cash (900*55)		$49,500
22-Aug	Cash	306
	Dividend Revenue (900*.34)		306
31-Dec	Unrealized Loss on AFS securities	$1,800
	Fair value Adjustment-AFS		$1,800
	(900*2)
If fair value adjustment account not used than use
	Investment in AFS Securities
31-Dec	No entry required
	Trader Investments
	Balance Sheet (Partial)
	31-Dec-18
	Current Assets:
	Long-term Assets:
	Investment in AFS Securities	$49,500
	Fair value Adjustment-AFS	($1,800)
	Net Investment in AFS Securities	$47,700
	Stockholders' Equity
	Accumulated Other Comprehensive Income:
	Unrealized Loss on AFS securities	-1800
	Trader Investments
	Income Statement (Partial)
	For the Year Ended December 31, 2018
	Other Income and (Expenses):
	Dividend Revenue	$306
If any doubt please comment