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ID: 2469934 • Letter: D
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Stock investment
The balance sheet caption used to report long-term investments in stocks not intended as a source of cash in the normal operations of the business.
transactions, trading securities
Securities that management intends to actively trade for profit.
Instructions
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Chart of Accounts
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Amount Descriptions
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Journal
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Balance Sheet
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Final Question
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View Mode Selection
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Instructions
Scofield Financial Co. is a regional insurance company that began operations on January 1, 2016. The following transactions relate to trading securities acquired by Scofield Financial Co., which has a fiscal year ending on December 31:
Record these transactions on page 10:
2016
Record these transactions on page 11:
2017
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Chart of Accounts
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Amount Descriptions
In CengageNOW, an Amount Description is a text entry other than an Account that has an amount associated with it.
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Journal
Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. In your computations, round per share amounts to two decimal places.
PAGE 10PAGE 11
JOURNAL
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Adjusting Entries
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Solution
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Adjusting Entries
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Points:
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Explanation
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Balance Sheet
Prepare the investment-related current asset balance sheet presentation for Scofield Financial Co. on December 31, 2017. Refer to the information given and the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Question not attempted.
Scofield Financial Co.
Balance Sheet (selected Current Asset items)
December 31, 2017
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Current assets:
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Solution
Scofield Financial Co.
Balance Sheet (selected Current Asset items)
December 31, 2017
1
Current assets:
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3
4
Points:
Feedback
Check My Work
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X
Final Question
How are unrealized gains and losses on trading investments presented in the financial statements?
Unrealized gains and losses on trading investments are reported on the selector 1
Stockholders’ Equity section of the balance sheet
income statement, often as “Other Income (Losses)”
. For 2016, Scofield Financial Co. would have reported an selector 2
unrealized loss of $7,038 as “Other Comprehensive Income (Loss)”
unrealized loss of $7,038 as “Other Losses”
. For 2017, Scofield Financial Co. would have reported an selector 3
unrealized gain of $86,460 as “Other Income”
unrealized gain of $79,422 as “Other Comprehensive Income (Loss)”
. If unrealized gains and losses were significant for Scofield Financial, then they would be selector 4
separately disclosed on the income statement
separately disclosed on the balance sheet
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2016
Mar. 14 Purchased 5,000 shares of Wilkomm Inc. as a trading security at $40 per share plus a brokerage commission of $500. Apr. 24 Purchased 1,800 shares of McMarsh Inc. as a trading security at $50 plus a brokerage commission of $198. Jun. 1 Sold 2,600 shares of Wilkomm Inc. for $38 per share less a $100 brokerage commission. 30 Received an annual dividend of $0.35 per share on Wilkomm Inc. stock. Dec. 31 The portfolio of trading securities was adjusted to fair values of $38 and $49 per share for Wilkomm Inc. and McMarsh Inc., respectively.Explanation / Answer
1 Recording the journal entries 2016 Description Debit($) Credit($) March.14 Investment in Wilk company 2,00,500 Bank 2,00,500 (To record the purchase of investments) April.14 Investment in Marsh company 90,198 Bank 90,198 (To record the purchase of investments) June.01 Bank 98,800 Investment in Wilk company 98,800 (To record the sale of securities) June.30 Bank 840 Dividend received 840 (Dividend at .035 per share for 2400 shares) Dec.31 Loss on investments 5,000 Profit and loss account 5,000 (To record the loss on fair value basis) 2017 April.4 Investment in Diley company 3,705 Bank 3,705 (To record the purchase of investments) June.28 Bank 960 Dividend received 960 (Rceieved dividend from wilkmom company) Sep.9 Bank 22,450 Investment in Diley company 22,450 (To record the sale of securities)