Question

al Value Journal Entries, Trading Investments The investments of Charger Inc. Indude a single investment: 8,000 shares of Raiders, Inc. common stock purchased on February 24, Year 1, for $41 per share induding brokerage commission. These shares were classified as trading securities. As of the December 31, Year 1, balance sheet date, the share price increased to 554 per share. Journalize the entries to acquire the investment on February 24, and record the adjustment to fair value on December 31, Year 1. Year 1 feb. 24 Year 1 Dec. 31 b. How is the unrealized gain or loss for trading investments reported on the financial statements? The unrealized gain or unrealized loss for trading Investments is disclosed in the (previous Next > 2^ do 331 PM

Answer 1

	WORKING NOTES:
		Value of trading securitites at the time of purchases year 1 (A)	$3,28,000
		(8,000 Shares X $ 41 per shares)
		at year end value of these shares (8,000 Shares X $ 54 ) (B)	$4,32,000
		Unrelized gain (B-A)	$1,04,000
	SOLUTION: A
Journal Entries
Sr. No.	Date	Account Title and explanation	Debit	Credit
1	February 24, Year 1	Trading securities	$3,28,000
		Cash		$3,28,000
		Record the purchase of 8,000 shares @ $ 41 per shares
2	December 31, year 1	Trading securities	$1,04,000
		Unrealized Gain on investments		$1,04,000
		Record the increase in $ 13 Per shares of 8000 shares
	SOLUTION: B
	The unrealized gain or unrealized losses for trading investments is classified in the Balance Sheet as Other Comprehensive income/Loss