Question

In: Accounting

B. Castleman Holdings had the following trading equity investment portfolio on January 1, 2019: --------------------------------------------Cost ------Fair...

B. Castleman Holdings had the following trading equity investment portfolio on January 1, 2019:

--------------------------------------------Cost ------Fair Value

1,000 shares of Evers Corp. ---$15,000 ------$15,700

900 shares of Rogers Corp. ----18,000 --------16,800

500 shares of Chance Corp. ----4,500 ----------3,000

----------------------------------------$37,500 -------$35,500

In 2019, Castleman Holdings completed the following investment transactions:

March 3 Sold the 500 shares of Chance Corp., @ $7.5 less fees of $65.

April 15 Bought 200 more shares of Evers Corp., @ $16.5 plus fees of $150.

August 1 Received cash dividend from Rogers Corp. @ $1 per share.

Castleman Holdings’ trading investment portfolio is as follows on December 31, 2019:

--------------------------------------------Cost ---------Fair Value

1,200 shares of Evers Corp. ---$18,300 --------$20,800

900 shares of Rogers Corp. ----18,000 ----------17,800

-----------------------------------------$36,300 --------$38,600

All of the investments of Castleman Holdings are nominal in respect to percentage of ownership (5% or less).

Required:

Prepare the journal entries for Castleman Holdings for the following transactions in 2019:

(a) The sale of the Chance Corp. shares.

(b) The purchase of the Evers Corp. shares.

(c) The 2019 adjusting entry for the trading equity investment portfolio.

(d) Briefly describe how the accounting would change if the investment portfolio was classified as non-trading.

Expert Solution

ekkarill92 answered 2 years ago

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