Question

Question 2 --/1 View Policies Current Attempt in Progress On December 21, 2020, Sage Company provided you with the following information regarding its equity investments. December 31,2020 Investments (Trading) Unrealized Gain (Loss) Cost Fair Value $17,500 $18.400 $(900) Clemson Corp. stock Colorado Co. stock (1,000) 10,600 9,600 Buffaloes Co. stock 18,400 19,010 610 $47,400 $46,110 Total of portfolio (1,290) Previous fair value adjustment balance 0 Fair value adjustment-Cr $(1,290) During 2021, Colorado Co. stock was sold for $10,1 10. The fair value of the stock on December 31, 2021, was Clemson Corp. stock-$17,600; Buffaloes Co.stock-$18,920. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2020. (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2021. (c) Prepare the adjusting journal entry needed on December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Credit Debit (a) (b) (c)

Answer 1

Solution:

- Ik Lak Credit Sunland Company General Journal Unrealized Holding gain or loss Dr To Fair Value Adjustment (To record Unrealized gain or loss at December 31, 2020) Debit $1,290 $1,290 $10,110 $490 Cash Dr Loss on Sale of Investment To Trading Investments (To record sale of colorado stock during 2021) 11 $10,600 12 | 13 14 C. $1,010 15 Fair Value Adjustment Dr (Note) To Unrealized Holding gain or loss (To record Unrealized gain or loss at December 31, 2021) $1,010 16 17 18 19 20 21 22 31 32 33 34 36 38 39 40 41 43 44 45 46 47 48 49 et352 Sheet269 (2) ) Sheet354 Sheet355 Sheet303 (2)

M AR 7 Note: Computation of Unrealized gain or loss on December 31, 2021 Investment (Trading) Cost Fair Value at Dec 31 2021 Unrealized holding Gain (Loss) Clemson Corp. 18400 17600 -800 Buffaloes co. 184001 18920 520 Total Previous fair value adjustment balance 1290 Fair Value adjustment 2021 1010 -280 9 10 11 12 15 17 19 20 21 22 23 24 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 48 49 et352 Sheet269 (2) ) Sheet354 Sheet355 Sheet303 (2) III 0 <