Clarity Corporation had the following transactions involving investments in trad
ID: 2548598 • Letter: C
Question
Clarity Corporation had the following transactions involving investments in trading securities during the year. Prior to these transactions, Clarity had never had any investments in trading securities. Prepare the required general journal entries to record these transactions Fcb. 16 Feb. 26 Mar. 2 Purchased 800 shares of GN Corporation stock at S28 per share plus a S400 brokerage fee. Purchased 500 shares of Honeyville Co. stock at $19 per share plus a $300 Mar. 28 Sold 200 shares of GN Corporation stock for S31 per share less a S150 Apr. 20 Sold 150 shares of Honcyville Co stock at $17 per share less a S100 brokerage Apr. 30 The company is preparing quarterly financial statements; prepare an adjusting Received a So.95 per share dividend from the GN Corporation. brokerage fee. fee. entry for the fair value adjustment on the trading securities. At April 30, the GN stock has valuc of S16 per share a fair value of S30 per share, and the Honcyville stock, has a fairExplanation / Answer
Journal Entries Date Debit Account Credit Account Amount Comments Feb-16 Trading Securities A/C $22,400 800 shares @ 28 Brokerage Fees A/C $400 To Bank/Cash A/C $22,800 Feb-26 Trading Securities A/C $9,500 500 shares @ 19 Brokerage Fees A/C $300 To Bank/Cash A/C $9,800 Mar-2 Cash $760 800 shares @ $0.95 To P&L A/C $760 (Dividend Received from securities will increase the cash and will also added to the profit) Mar-28 Bank/Cash A/C $6,200 200 shares @ 31 Brokerage Fees A/C $150 Trading Securities A/C $5,600 200 shares @ 28 To P&L A/C $600 200 shares @ $3 profit To Bank/Cash A/C $150 Apr-20 Bank/Cash A/C $2,550 150 shares @ 17 P&L A/C $300 150 shares @ $2 loss Brokerage Fees A/C $100 Trading Securities A/C $2,850 150 shares @ 19 To Bank/Cash A/C $100 Apr-30 Trading Securities A/C $150 See working Notes To P&L A/C $150 See working Notes Working Calculations: GN Honeyville Price Qty Total Price Qty Total Buy 28 800 $22,400 19 500 $9,500 Sell 31 200 $6,200 17 150 $2,550 Remaining 28 600 $16,800 19 350 $6,650 Fair Value 30 600 $18,000 16 350 $5,600 Profit/ (loss) 2 600 $1,200 -3 350 ($1,050) Net Profit (Loss) $150 (1200-1050)