Question

On December 21, 2017, Bucky Katt Company provided you with the following information regarding its equity investments. December 31, 2017 Fair Value Unrealized Gain (Loss) Investments (Trading) Cost (1,000) (1,000 ) 600 (1,400) Clemson Corp. stock Colorado Co. stock Buffaloes Co. stock Total of portfolio Previous fair value adjustment balance Fair value adjustment-Cr. $20,000 $19,000 9,000 20,000 20,600 $50,000 $48,600 10,000 0 $ (1,400) During 2018, Colorado Company stock was sold for $9,400. The fair value of the stock on December 31, 2018, was Clemson Corp. stock $19,100; Buffaloes Co. stock $20,500. None of the equity investments result in significant influence. (a) Prepare the adjusting journal entry needed on December 31, 2017 (b) Prepare the journal entry to record the sale of the Colorado Co. stock during 2018 (c) Prepare the adjusting journal entry needed on December 31, 2018 (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 0 for the amounts.) (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 tities and enter O for the amounts.) No. Account Titles and Explanation Debit Credit

Answer 1

No.	Account Titles and Explanation	Debit ($)	Credit ($)
(a)	Unrealized Holding Gain or Loss—Income	1400
	'Securities Fair Value Adjustment (Trading)		1400
(b)	Cash	9400
	Loss on sale of securities (12280-11690)	600
	Equity investments		10000
(c )	Securities Fair Value Adjustment (Trading)	1000
	Unrealized Holding Gain or Loss—Income		1000

Note:

Investments	Cost	Fair value	unrealized gain/(loss)
Clemson Corp. Stock	20000	19100	-900
Buffaloes co.Stock	20000	20500	500
Total	40000	39600	-400
Previous year fair value adjustment balance			1400
Current year - securities fair value adjustment			1000