Carlsville Company, which began operations in 2015, invests its idle cash in tra
ID: 2424729 • Letter: C
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 its 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 secuirites is $180,000
Required
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
Explanation / Answer
jan 20 Trading securities [(800*$26) +125] Dr.$20925
To cash 20925
Feb9 Trading securities[(2200* $44.25)+578] Dr.$97928
To cash 97928
Oct 12 Trading securities[(750* $7.50)+200] Dr.5825
To cash 5825
April 15 cash [(800*$29) - 285] Dr.$22915
To Trading securities [(800*$26) +125] $20925
To gain on sale of trading securities $1990
July 5 cash [(750 *$10.25)-102.5] Dr.$7585
To Trading securities[(750* $7.50)+200] 5825
To gain on sale of trading securities 1760
july22 trading securuites[(1600*$30) + 444] Dr.$48444
To cash 48444
Aug19 trading securuites[(1800* $18.25) + 290] Dr.$33140
To cash 33140
Feb 27 trading securuites[(3400* $34) + 420] Dr.116020
To cash 116020
MAr 3 cash[(1600 *25) -250] Dr.39750
loss on sale of securities Dr.$8694
To trading securuites[(1600*$30) + 444] $48444
June21 cash{(2200 *42)-420] Dr.91980
loss on sale on securities Dr.5948
To Trading securities[(2200* $44.25)+578] .$97928
june 30 trading securties (1200*47.5 +595) Dr.$57595
To cash 57595
Nov1 Cash[(1800*18.25 - 309] Dr.32541
loss on sale of securities Dr.599
To trading securuites[(1800* $18.25) + 290] $33140