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Grass Security, which began operations in 2017, invests in long-term available-for-sale securities. Following is a series of
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Answer #1
1) Journal Entries
Date Account titles Debit Credit
2017
Jan.20 Long-Term Investments—AFS (J&J) (1000 x $20.50) + 240 20740
                Cash 20740
Purchased Johnson & Johnson shares
Feb.9 Long-Term Investments—AFS (Sony).(1200 x $46.20) +225 55665
                Cash 55665
Purchased Sony shares
June.12 Long-Term Investments—AFS (Mattel) (1500 x $27) + $195 40695
                Cash 40695
Purchased Mattel shares
Dec.31 Unrealized Loss - Equity 3650
           Market Adjustment—AFS (LT) 3650
Annual adjustment to market values
Cost Fair Value Difference
j &j = 1000 x 21.50 20740 21500 760
Sony = 1200 x 38 55665 45600 -10065
Mattel = 1500 x 30.90 40695 46350 5655
Total 117100 113450 -3650
2018
Apr.15 Cash 22975
            Gain on Sale of Investments 2235
             Long-Term Investments—AFS (J&J) 20740
Sold Johnson & Johnson shares [(1,000 x $23.50) - $525]
Jul.5 Cash 35615
  Loss on Sale of Investments 5080
             Long-Term Investments—AFS (Mattel) 40695
Sold Mattel shares [(1,500 x $23.90) - $235]
Jul.22 Long-Term Investments—AFS (Sara Lee) (600 x $22.50 + 480 13980
                     Cash 13980
Purchased Sara Lee shares
Aug.19 Long-Term Investments—AFS (Eastman Kodak 15498
              Cash 15498
Purchased Eastman Kodak shares [(900 x $17 + $198)
Dec. 31 Unrealized Loss - Equity 10168
            Market Adjustment—AFS (LT) 10168
Annual adjustment to market values
Cost Fair value Profit/loss
Kodak 15498 17325 1827
Sara lee 13980 12000 -1980
Sony 55665 42000 -13665
-13818
Fair Value Adjustment account:
Required balance 13818 cr.
Unadjusted balance 3650 cr.
Required change 10168 cr.
2019
Feb.27 Long-Term Investments—AFS (Microsoft) 161325
            Cash 161325
Purchased Microsoft shares [(2400 x $67.00) + $525]
June. 21 Cash 56720
         Gain on Sale of Investments 1055
          Long-Term Investments—AFS (Sony) 55665
Sold Sony shares [(1,200 x $48.00) - $880].
jun. 30 Long-Term Investments—AFS (Black & Decker) 50835
             Cash 50835
Purchased Black & Decker shares [(1,400 x $36.00) + $435]
Aug.3 Cash 9315
Loss on Sale of Investments 4665
                     Long-Term Investments—AFS (Sara Lee) 13980
Sold Sara Lee shares [(600 x $16.25) - $435]
Nov.1 Cash 19850
         Gain on Sale of Investments 4352
         Long-Term Investments—AFS (E. Kodak) 15498
Sold Eastman Kodak shares [(900 x $22.75) - $625]
Dec.31 Market Adjustment—AFS (LT) 21858
                Unrealized Loss—Equity 13818
                 Unrealized Gain—Equity 8040
Annual adjustment to market values
Cost Fair market difference
Black & Decker 50835 54600 3765
Microsoft 161325 165600 4275
Total 8040
Fair Value Adjustment account:
Required balance . 8040 dr
Unadjusted balance 13818 cr.
Required change 21858 dr.
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