Question

200,500 Investments - Wilkomm Inc Cash 200,500 90,198 24 Investments - McMarsh Inc Cash 90.198 1 98,700 5,560 Cash Loss on Sale of Investments Investments - Wilkomm Inc. 104,260 840 30 840 Cash Dividend Revenue Dec 31 Unrealized Loss on Trading Investments Valuation Allowance for Trading Investments Cost Fair Value Wilkomm Inc. Mc Marsh Inc Total Enter a formula of number of shares x cost per share Increase (decrease) in fair value 2015

Answer 1

Solution:

1.)

Year 2016

No.	Date	Account Title and Explanation	Debit ($)	Credit ($)
1.	Mar.14	Investment - Wilkomm Inc. (5000 shares × $40 per share) + $500	200,500
		Cash		200,500
		(To record purchased shares of Wilkomm Inc.)
2.	April 24	Investment - McMarsh Inc. (1,800 shares ×$50 per share)+ $198	90,198
		Cash		90,198
		(To record purchased shares of McMarsh Inc.)
3.	June 1	Cash(2600 shares ×$38 per share) - $100	98,700
		Loss on sale of investment	5,560
		Investment - Wilkomm Inc. ( 2,600 shares × ($200,500 ÷ 5,000 shares)		104,260
		(To record sold shares of Wilkomm Inc.)
4.	June 30	Cash (5000 shares - 2600 shares) ×$0.35 per share	840
		Dividend Revenue		840
		(To record the dividend revenue)
5.	Dec.31	Unrealized loss on trading investment	7,038
		Valuation allowance for trading		7,038
		( To record adjusted fair value)

* $179,400 - $186,438 =$7,038 in table below:

	Number of Shares	Cost per share	Fair Value per share	Cost	Fair Value
Wilkomm Inc.	2400	$40.10($200,500 ÷ 5,000 shares)	$38	$96,240	$91200
McMarsh Inc.	1800	$50.11($90,198÷1800 shares)	$49	$90,198	88200
Total				186,438	$179,400

Year 2017

No.	Date	Account Title and Explanation	Debit ($)	Credit ($)
1.	Apr.4	Investment - Daley Inc. (3500 shares × $30 per share)+ $175	105175
		Cash		105175
		( To record purchase shares of Daley inc.)
2.	June 28	Cash(2400 shares × $0.40)	960
		Dividend Revenue		960
		(To record dividends revenue)
3.	Sep.9	Cash (700 share × $32 per share) - $50	22350
		Gain on sale of investment		1315
		Investment - Daley inc. (700 shares × (105175 ÷ 3500 shares)		21035
		(To record sold shares)
4.	Dec.31	Valuation allowances for trading investment($7038 +79422)	86460
		Unrealized gain on trading investment		86460
		(To record adjusted fair value)

2.)

Balance Sheet (selected item)

Current assets:
Trading investment (at cost)	$270578
Plus Valuation allowances for trading investment	$79422
Trading investment (at fair value)		$350,000

3.)

Unrealized gain or losses are reported on the income statement often as other income losses.

Unrealized gain or losses (for 2016)	$7038
Unrealized gain or losses (for 2017)	$ 86460