Question

During the year ended December 31, 2019, and in the following months of January and February 2020, Company M had the following transactions pertaining to it held for trading investments: Apr. 15 Purchased 2,000 Starr Corporation $5, preferred shares for $206,000 cash. July 11 Received quarterly cash dividend. 21 Sold 500 Starr shares for $57,500 cash. Oct. 15 Received quarterly cash dividend. Starr declared the quarterly dividend on November 22, to preferred shareholders of record on December Nov. 22 15. payable on January 1. Dec. 31 Starr's shares were trading at $116 per share. Jan. 29 Due to an urgent need for cash, 700 Start Corporation shares were sold despite a drop in the share price to $92 per share Feb. 13 Marshall sold an additional 500 Starr shares after the market recovered to $118 per share. Instructions a) Record the above transactions, using the fair value through profit or loss model. Prepare any required adjusting entries at December 31,

Answer 1

Rate the help you received!!

Step 1

The FV- fair Value of Securities is considered as the current value at which the security is trading at the market. If the FV goes above the purchase cost, the shares sold at this time will result in gains.

Step 2

The entries are recorded as below:

Reference:

Step 3

Computation: