Question

Prepare the adjusti/ng entry at December 31, 2020, to show the securities at fair value. Blos/som has less than a 20% owner/ship interest in all these common stocks (C Co., D Co., and E Co.). (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

For first box, Unrealized loss isn't answer and second box, Fair value Adjustment is not answer.

On December 31, 2019, the end of its first year of operations, Blossom Associates owned the following securities that are held as long-term investments. Common Stock Shares Cost C Co. 1,030 $48,410 D Co. 5,390 42,042 E Co. 1,169 22,211 On this date, the total fair value of the securities was equal to its cost. The securities are not held for influence or control over the investees. In 2020, the following transactions occurred. July 1 Received $2 per share semiannual cash dividend on D Co.common stock. Aug. 1 Received $0.50 per share cash dividend on C Co.common stock. Sept. 1 Sold 900 shares of D Co. common stock for cash at $10 per share. Oct. 1 Sold 290 shares of C Co. common stock for cash at $55 per share. Nov. 1 Received $1 per share cash dividend on E Co. common stock. Dec. 15 Received $0.50 per share cash dividend on C Co.common stock. 31 Received $2.40 per share semiannual cash dividend on D Co. common stock. At December 31, the fair values per share of the common stocks were C Co. $46, D Co. $7.60, and E Co. $23. These investments should be classified as long-term.

Answer 1

DEC 31 FAIR VALUE ADJUSTMENT DR 3038

TO UNREALIZED PROFIT 3038

CALCULATION OF FAIR VALUE -

C'S - (1030-290) x 46 =34,040

D'S - (5390-900) x 7.6 =34,124

E'S - 1169 x 23 = 26,887

TOTAL = 95,051

ACTUAL VALUE = 92,013

DIFFERENCE = 3038