Question

Easton Company prepares annual adjusting entries only. During the third quarter of Fiscal Year 2018, Easton Company acquired the following trading securities: Date Company # of Shares Price per Share 8/15 X Company 1,500 $44 9/25 Y Company 1,250 30 9/30 Z Company 1,000 30 On November 10th, Easton Company sold the Y Company stock for $31 per share. On December 15th, Z Company paid dividends of $0.12 per share. The following were the year-end market values: Company FMV per Share X Company $47 Y Company 15 Z Company 27 What the total dollar values that Easton Company should record for the Unrealized Gain or (Loss) on Trading Securities for 2018? Enter a Loss as a negative number. Right now i have 4500 and -3000 so do I subtract the 3000 from 4500 and that's the answer?

Answer 1

Answer:

Yes, You are correct.

Date Company # of Shares Price per Share

8/15 X Company 1,500 $44

9/25 Y Company 1,250 $30

9/30    Z Company 1,000 $30

On November 10th, Easton Company sold the Y Company stock at $31 per share.

As such at year end, Easton company retains X Company and Z company shares.

Year end market values: Company FMV per Share are:

X Company = $47

Y Company = $15

Z Company = $27

Hence:

Unrealized Gain or (Loss) on Trading Securities for 2018 = (47 - 44) * 1500 + (27 - 30) * 1000 = $1,500

Unrealized Gain (Loss) Easton Company should record on Trading Securities for 2018 = $1,500