Question

62. Gruden Bancorp Inc. purchased a portfolio of trading securities during Year 1. The cost and fair value of this portfolio on December 31, Year 1, was as follows:

1	Name	Number of Shares	Total Cost	Total Fair Value
2	Griffin Inc.	1,480.00	$29,600.00	$32,560.00
3	Luck Company	1,230.00	31,980.00	25,830.00
4	Wilson Company	870.00	31,320.00	28,710.00
5	Total		$92,900.00	$87,100.00

On May 10, Year 2, Gruden Bancorp Inc. purchased 980 shares of Carroll Inc. at $26 per share plus a $120 brokerage commission.

Required:

A.	Provide the journal entry to record the adjustment of the trading security portfolio to fair value on December 31, Year 1.*
B.	Provide the journal entry to record the May 10, Year 2, purchase of Carroll Inc. stock.*
	*Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2

Answer 1

Part-a				Asset	Liabilities	Equity
Date	Account Titles and Explanation	Debit	Credit
$43,830.00	Unrealized Gain/(Loss) on Trading Investment	$5,800.00				$5,800.00
	Valuation Allowance for trading inventment		$5,800.00	-$5,800.00
	(92900-87100)
Part-b				Asset	Liabilities	Equity
Date	Account Titles and Explanation	Debit	Credit
$43,587.00	Investment - Carroll Inc.	$25,600.00		$25,600.00
	Cash ( 980 Shares X $26)+ 120		$25,600.00	-$25,600.00