Question

Exercise 15-10 Transactions and fair value adjustments for stock investments with insignificant influence LO P4 Carlsville Company began operations in the current year and had no prior stock investments. The following transactions are from its short-term stock investments with insignificant influence. Prepare journal entries to record these transactions. On December 31, prepare the adjusting entry to record the fair value adjustment for the portfolio of stock investments. 2:36:07 ook July 22 Purchased 1,400 shares of Hunt Corp. at $26 per share. Sept. 5 Received a $2 cash dividend for each share of Hunt Corp. Sept. 27 Purchased 3,200 shares of HCA at $29 per share. Oct. 3 Sold 1,400 shares of Hunt at $21 per share. Oct. 30 Purchased 1,200 shares of Black & Decker at $54 per share. Dec. 17 Received a $3 cash dividend for each share of Black & Decker. Dec. 31 Fair value of the short-term stock investments is $162,000. int ences View transaction list View journal entry worksheet No Date General Journal Credit Debit 36,400 Jul 22 Stock investments Cash 36,400 < Prev 2 of 4 * Next > ere to search

Answer 1

Solution:

No	Date	General Journal	Debit	Credit
1	Jul. 22	Equity Investments-Hunt Corp. (1400*26)	$ 36,400
		Cash		$ 36,400
		(To record securities purchased)
2	Sept. 5	Cash (1400*2)	$    2,800
		Dividend revenue		$    2,800
		( To record dividend revenue earned)
3	Sept. 27	Equity Investments-HCA(3200*29)	$ 92,800
		Cash		$ 92,800
		(To record securities purchased)
4	Oct. 3	Cash(1400*21)	$ 29,400
		Loss on sale of Investment-Hunt Corp.(1400*5)	$    7,000
		Equity Investments-Hunt Corp. (1400*26)		$ 36,400
		( To record hunt corp. equity sale)
5	Oct. 30	Equity Investments-Black & Decker(1200*54)	$ 64,800
		Cash		$ 64,800
		(To record securities purchased)
6	Dec. 17	Cash (1200*3)	$    3,600
		Dividend revenue		$    3,600
		( To record dividend revenue earned)
7	Dec. 31	Fair Value Adjustment(Note:1)	$    4,400
		Unrealized holding gain or loss		$    4,400
		( To record fair value adjustment)

Note:

1) Unrealized gain / (loss)

Investments	Cost Price	Fair Value	Unrealized gain / (loss)
HCA	$            92,800	$             162,000
Black & Decker	$            64,800
Total	$          157,600	$             162,000	$                                  4,400