Question

The Portland Co been made since the company was formed, as follows: mpany was formed on January 1, 20x1. Several debt and equity investments have Number of Bonds: Stated common Purchase Date Name of Face Interest Maturity shares Cost at date pany Value Rate Date purchased of pase Fair Value 1-Apr DJH, Inc. 28-Jun Newark Co 11-Nov Rivera, Inc. 2-Apr Sherwood Co 1-Oct Grey, Inc. 93,300 $ 91,200 19 50022,000 7,800 $ 90,000| | 11/1/x51 4% 250 500 8,500 40,800 245,000 $ 404,660$ 406,800 600 37,200 246,160 1) The purchase price of each of the bond investments does NOT include accrued interest. 2) The DJH, Inc. bonds pay semiannual interest on May 1 and November 1. 3) The Grey, Inc. bonds pay semiannual interest on April 1 and October 1. 4) Straight-line amortization is used where appropriate for any premiums or discounts. Amortization entries are recorded once a year, at the end of the fiscal year 5) December 31st is the fiscal year-end for the Portland Compan 6) The total fair value of all investments as of 12/31/x1 was: 118,700 7) Assume all appropriate entries were recorded properly since the company was formed. 8) None of the investments have been sold as of 12/31/x2. REQUIRED 1) Assume all investments were purchased for the TRADING PORTFOuo. a) Prepare all appropriate adjusting entries at 12/31/x2. b) Show the appropriate balance sheet presentation for the Trading Portfolio at 12/31/x2. 2) Assume all investments were purchased for the AVAILABLE-FOR-SALE PORTFOLIO a) Prepare all appropriate adjusting entries at 12/31/x2. b) Show the appropriate balance sheet presentation for the Available-for-Sale Portfolio at 12/31/x2.

Answer 1

1	Trading Portfolio
Accrued interest
DJh Inc	600
Grey Inc	1,875
	2,475
Balance Sheet
Liabilities	Amount	Asset	Amount
		Investments
		DJH Inc	91200
		Newark Co	22000
		Rivera inc	7800
		Sherwood Co	40800
		Grey Inc	245000
		Accured Interest	2,475.00
2	Available for sale
Unrealised Gain or Loss
Investment	Cost	Fair Value	Gain or (Loss)
DJH Inc	93,300.00	91200	(2,100.00)
Newark Co	19,500.00	22000	2,500.00
Rivera inc	8,500.00	7800	(700.00)
Sherwood Co	37,200.00	40800	3,600.00
Grey Inc	246,160.00	245000	(1,160.00)
			2,140.00
Balance Sheet
Liabilities	Amount	Asset	Amount
Shareholders Equity		Investments
Unrealised Gain	(2,140)	DJH Inc	91200
		Newark Co	22000
		Rivera inc	7800
		Sherwood Co	40800
		Grey Inc	245000
		Accured Interest	2,475.00