Question

Southeast Bank invests in equity securities and prepares quarterly financial statements. At the beginning of the fourth quarter of 2019, the bank held as an investment in equity securities 180 shares of Eglan Company common stock that originally cost $5,220. At that time, these securities had a fair value of $5,040. During the fourth quarter, the bank engaged in the following transactions:

Oct. 26	Purchased 360 shares of Farrell Company common stock for $34 per share.
Nov. 26	Sold 180 shares of Eglan common stock for $27 per share.
Dec. 10	Purchased 420 shares of Gray Company common stock for $45 per share.

On December 31, 2019, the quoted market prices of the shares were as follows: Eglan Company, $52 per share; Farrell Company, $38 per share; and Gray Company, $43 per share.

Required:

1.	Prepare journal entries to record the preceding information for the fourth quarter.
2.	Show what the bank reports on its fourth quarter 2019 income statement for these equity securities.
3.	Show how the bank reports this investment in equity securities on its balance sheet at the end of the fourth quarter of 2019.

Answer 1

Do nale Debt Cooler NOV 261 Journal Entofes portcelang Trading corottes AIC 00 12,240 TO Cash Al 12.240 (360 Shares y $34 per shore) C FOOpel Corey Cornion shock) Tooding secol of Hes AIC DO 4860 CASA A TO Cash Al SDUO 4860 To weazed loss o 1 80 Foading secondes AL (180 showe 5 x 27 Postope) - Souo Gylan Common Stock) en toading secures ALL OV 18.000 To cash nk 18.900 C420sha ex $450 Shane) Cory Company Common shal Adjusting entoe m de 31, 2019 DEC 31 Tooding securos AICOS luyo TOUTEFZ gapnon fooding SeorBOAK ццо C$.38 x 360 Shares) - $12.200 CFaroen Compony common stock Dec 3) Trading secuceresc 07 "To tr z ed garn en toading Buo C$43x.420 share)-18900(Grecopy Summary> Tocating speechipes ($2,200+$1440)+($18900-$300) $31.900 * Unalized Goesn loss pl400-800 = 60 * Recepted loss = $180 Southeast bont comme Slateriell ros the fourth Quarter eaded Dec 31, 2019 Ner Prcome o Uroccolfzed God loss $600 Realfzed loss ($ 180) Nel poder for the years 60 840 Southeast Bank. Balance sheet December 31, 2019 $31.700 Thestments : Toading scene of thes Stocicne bus cacerty: Commor stock Retened Canngs