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During 2018, Speedway Financial Corporation had the following held for trading investment transactions: Feb. 1 Purchased...

During 2018, Speedway Financial Corporation had the following held for trading investment transactions: Feb. 1 Purchased 580 CBF common shares for $34,220. Mar. 1 Purchased 780 RSD common shares for $21,840. Apr. 1 Purchased 7% MRT bonds at face value, for $65,000. Interest is received semi-annually on April 1 and October 1. July 1 Received a cash dividend of $3 per share on the CBF common shares. Aug. 1 Sold 180 CBF common shares at $57 per share. Sept. 1 Received a cash dividend of $1.40 per share on the RSD common shares. Oct. 1 Received the semi-annual interest on the MRT bonds. 1 Sold the MRT bonds for $67,000. Dec. 31 The market prices of the CBF and RSD common shares were $54 and $29 per share, respectively. Speedway had the following held for trading investment transactions in 2019: Mar. 1 Sold 400 CBF common shares for $23,200. June 1 Purchased 2,200 KEF common shares for $30,800. Sept. 1 Received a cash dividend of $1.40 per share on the RSD common shares. Oct. 1 Sold 390 RSD common shares for $12,090. Dec. 31 The market prices of the RSD and KEF common shares were $33 and $11 per share, respectively.

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Expert Solution

DATE PARTICULARS DEBIT CREDIT
Feb-01 held for trading investments 34220
to cash 34220
Mar-01 held for trading investments 21840
to cash 21840
Apr-01 held for trading investments 65000
to cash 65000
Jul-01 cash 1740
to dividend revenue 1740
Aug-01 cash 10260
realised loss on held for trading investments 360
to held for trading investments 10620
Sep-01 cash 1092
to dividend revenue 1092
Oct-01 cash 2275
to interest revenue 2275
cash 67000
to held for trading investments 65000
to realised gain on held for trading investments 2000
Dec-01 unrealised loss on held for trading investments 1220
to held for trading investments 1220

oct 1

cash = (65000 x 7%)/2 = 2275

dec 1

{(580-180) x [(34220/580)-54} + 780 x [(21840/780) -29 ]

= 2000 + (-780)

=1220


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