Question

In January 2022, the management of Crane Company concludes that it has sufficient cash to purchase some short-term investmentJournaline the transactions and post to the accounts Debt Investments and Stacklestments. Use the account form (Record journaStock Investments Feb. 1 51600 Aug. 1 9116 Mar. 1 C 19610 Mar. 1 Dec. 31 Bal. • C Dec. 31 Bal. 62094 62094 Debt Investments J. Your answer is partially correct. Prepare the adjusting entry at December 31, 2022, to report the investments at fair value

Find the adjusting entry.

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Solution

Adjustment Journal entries
Date Account details Debit Credit
31st December Unrealized loss on Equity investment 7662
Equity Investment -Fair value adjustment (LAF) 3952
Equity investment - Fair value adjustment (NCL) 3710
(being closing shares of equity investment being revalued as per fair value)
Workings
Stock :- LAF
Details No of shares Price/share ($) Amount ($)
Purchased 1200 43 51600
Sold 212
Balance 988 43 42484
Fair value 988 39 38532
Loss 3952
Stock :- NCL
Details No of shares Price/share ($) Amount ($)
Purchased 530 37 19610
Balance 530 37 19610
Fair value 530 30 15900
Loss 3710
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