Question

Stoll Co.'s long-term available for sale portfolio at the start of this year consists of the following. Available-for-Sale Securities Company A bonds Company B notes Company C bonds Cost $534,300 159,49€ 661,9ee Fair Value $490, eee 148,888 644,280 Stoll enters into the following transactions involving its available-for-sale debt securities this year. Jan. 29 Sold one-half of the Company B notes for $78,5ee. July 6 Purchased bonds of Company X for $120,600. Nov. 13 Purchased notes of Company Z for $267,000. Dec. 9 Sold all of the bonds of Company A for $519, eee. The fair values at December 31 are B, $83,900; C. $608,900; X, $100,000; and Z. $275,000. Required: 1. Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities. 2. Determine the amount Stoll reports on its December 31 balance sheet for its long-term investments in available-for-sale securities Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries to record these transactions, including the December 31 adjusting entry to record the fair value adjustment for the long-term investments in available-for-sale securities. No Date General Journal Debit Credit Jan. 29 DO

Answer 1

(1) In the books of Stoll company

Journal of Stoll Company

Date	Particulars	Debit	Credit
Jan 29	Bank a/c Dr To Company B notes a/c[$148000*50%] To Profit on sale of Company B notes a/c	$78500	$74000 $4500
July 6	Company X bonds a/c Dr To Bank a/c	$120600	$120600
Nov 13	Company Z notes a/c Dr To Bank a/c	$267000	$267000
Dec 9	Bank a/cDr To Company A bonds a/c To Profit on sale of Company A bonds a/c	$519000	$490000 $29000

Adjustment entry as on 31 December

Date	Particulars	Debit	Credit
Dec 31	Fair Value Adjustment on Company B notes a/c Dr Fair Value Adjustment on Company C bonds a/c Dr Company X bonds a/c Dr Fair Value Adjustment on Company Z notes a/c Dr To Company B notes a/c[$83900-$74000]* To Company C bonds a/c[$644280-$608900]* To Fair Value Adjustment on Company X bonds a/c[$120600-$100000]* To Company Z notes a/c[$275000-$267000]*	$9900 $35380 $20600 $8000	$9900 $35380 $20600 $8000

* Difference of Fair Value and Book Value

(2)The amount Stool company reports in its BAlance Sheet as on 31 December with regard to Securities held for Sale = $1067800

Particulars	Book Value	Fair Value	Unrealised gains [Fair Value Adjustment]
Company B notes	$74000[$148000*50%]	$83900	$9900
Company C bonds	$644280	$608900	$35380
Company X bonds	$120600	$100000	($20600)
Company Z notes	$267000	$275000	$8000
Total		$1067800