Question

Prepare the adjusting entry at December 31, 2020 to report the investment securities at fair value. All securities are considered to be trading securities. 
 * (c) Show the balance sheet presentation of investment securities at December 31, 2020. 
 * (d) Identify the income statement accounts and give the statement classi cation of each 
account. 


ES Problem 16-02A a-d (Part Level Submission) (Video) In January 2020, the management of Wildhorse Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions occurred. n) n) Purchased 800 shares of Muninger common stock for $40,000 Feb. 1 n) Mar. 1 Purchased 1,000 shares of Tatman common stock for $25,000. dy Apr. 1 Purchased 70 $1,280, 5% Yoakem bonds for $89,600. Interest is payable semiannually on April 1 and October 1 July 1 Received a cash dividend of $0.70 per share on the Muninger common stock. Aug. 1 Sold 266 shares of Muninger common stock at $65 per share. Sept. 1 Received a $2 per share cash dividend on the Tatman common stock Received the semiannual interest on the Yoakem bonds. Oct. 1 Oct. 1 Sold the Yoakem bonds for $88,60o. At December 31, the fair value of the Muninger common stock was $51 per share. The fair value of the Tatman common stock was $24 per share (a) Your answer is partially correct. Try again. Journalize the transactions and post to the accounts Debt Investments and Stock Investments. (Use the T-account form.) (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts.) Date Account Titdes and Explanation Debit Credit Feb. 1 Stock Investments 40000 40000 Cash Mar. 1 Stock Investments 25000 25000 Cash Debt Investments Apr. 1 89600 Date Account Titles and Explanation Debit Credit 40000 Stock Investments Feb. 1 40000 Cash Stock Investments 25000 Mar. 1 25000 Cash Debt Investments 89600 Apr. 1 89600 Cash July 1 Cash 560 Dividend Revenue 560 Cash Aug. 1 Stock Investments Gain on Sale of Stock Investments Cash 1000 Sept. 1 1000 Dividend Revenue Cash Oct. 1 Interest Revenue (To record the receipt of semianmual interest on Yoakem bonds Cash 88600 Oct. 1 10000 Loss on Sale of Debt Investments 89600 Debt Investments (To record the sale of Yoakem bonds) Stock Investments 40000 Feb. 1 25000 Mar. 1 Dec. 31 Bal. 65000 Debt Investments 89600 Oct. 1 Apr. 1 88600 Dec 31 Bali

Answer 1

solution: Journal entries accounts debit account title credit date stock investments Feb-01 stock investments cash Feb-01 40000 Mar-01 25000 dec 31 bal 51700 40000 Aug-01 13300 40000 Mar-01 stock investments 25000 25000 cash debt investments Feb-01 89600 Aug-01 89600 89600 Apr-01 debt investments dec 31 bal 0 89600 cash Jul-01 cast dividend revenue 560 560 800 0.7 Aug-01 cash =266 65 17290 stock investments-(40000/800) 266 Gain on sale 13300 stock investment 3990 Sep-01 cash 2000 dividend revenue 2000 1000*2 2240 Oct-01 cash Interest revenue 2240 89600*0.05 6/12 Oct-01 LoE on sale of debt investment 88600 1000 89600 t investme 4 Sheet453 Sheet455 Sheet456 Sheet457 Sheet458 Sheet459 Sheet454 Sheet460 Sheet452 ENG 10:35 dll T 27/06/2019

working securities cost adjusting entry fair value account title Dec-31 unrealised gain or loss fair value adjustment- trading securities (51700-51234)* debit munigen tatman 27234 51*(800-266) 24000 24*1000 51234 credit 26700 (20000/400)*(400-133) 25000 51700 date д66 466 balance sheet (Partial) 1,2020 short term investments, at fair value 51234 Income Statement Account Dividend Revenue category Other revenues and gains Other revenues and gains Other revenues and gains Other expenses and losses Gain Sale of Stock Investments Interest Revenue Loss on Sale of Debt Investments Unrealized Loss-Income Other expenses and losses 4H Sheet452 Sheet453 Sheet455 Sheet456. Sheet457 Sheet458 Sheet459 Sheet454 Sheet460 ENG 10:35 XE US 27/06/2019

Answer 2

Date

Account Titles and Explanation

Debit

Credit

Dec. 31

enter an account title for  the adjusting entry on December 31

enter a debit amount

enter a credit amount

enter an account title for  the adjusting entry on December 31

enter a debit amount

enter a credit amount