Question

Prepare Tiker Company's journal entries to record the following transactions for the current year, includ- ing any adjusting entry to record the fair value of the stock investments portfolio. This is the first and only time the company purchased such securities. May 9 Purchases 200 shares of Higo stock as a short-term investment at a cost of $30 per share. Tiker has insignificant influence over Higo. June 2 Sells 20 shares of its investment in Higo stock ($600 cost) at $33 per share. Dec. 31 The closing market price (fair value) of the Higo stock is $23 per share. QS C-9 Investment in equity securities with insignificant influence P4

Answer 1

Solution: Journal Entries for Equity Investments of Tiker Company`s

Date	Accounts Titles and Explanation	Debit	Credit
May. 9	Equity Investments	$             6,000
	Cash (200 shares * 30)		$           6,000
	(Being equity investments purchased)
Jun. 2	Cash (20 Shares *$33)	$                660
	Gain on sale of equity investments		$                 60
	Equity Investments		$               600
	( Being investments sold)
Dec. 31	Unrealized loss on equity investment	$             1,260
	Fair Value Adjustment ( 180 Shares * ( 30-23))		$           1,260
	( Being fair value adjustment)

Notes:

1) Fair value method has been used for journal entries.