Question

Carlsville Company began operations in the current year and had no prior stock investments. The following transactions are from its short-term stock investments with insignificant influence. Prepare journal entries to record these transactions. On December 31, prepare the adjusting entry to record the fair value adjustment for the portfolio of stock investments.

July		22		Purchased 1,700 shares of Hunt Corp. at $25 per share.
Sept.		5		Received a $2 cash dividend for each share of Hunt Corp.
Sept.		27		Purchased 3,500 shares of HCA at $26 per share.
Oct.		3		Sold 1,700 shares of Hunt at $20 per share.
Oct.		30		Purchased 1,200 shares of Black & Decker at $41 per share.
Dec.		17		Received a $3 cash dividend for each share of Black & Decker.
Dec.		31		Fair value of the short-term stock investments is $143,000.

• Fair value of the short-term stock investments is $143,000. Record the year-end adjustment to fair value, if any. ( I need help determining the value to record, I know we debit "Fair value adjustment - stock" and credit "unrealized gain - income"

Answer 1

Journal entry

Date	General Journal	Debit	Credit
July 22	Investment in Hunt Corp (1700*25)	42500
	Cash		42500
Sep 5	Cash (1700*2)	3400
	Dividend revenue		3400
Sep 27	Investment in HCA (3500*26)	91000
	Cash		91000
Oct 3	Cash	34000
	Loss on sale of investment	8500
	Investment in Hunt Corp		42500
Oct 30	Investment in Black & Decker (1200*41)	49200
	Cash		49200
Dec 17	Cash (1200*3)	3600
	Dividend revenue		3600
Dec 31	Fair value adjustment (143000-140200)	2800
	Unrealized holding gain on investment		2800