Question

Carlsville Company, which began operations in 2017, invests its idle cash in trading securities. The following transactions are from its short-term investments in trading securities 2017 Jan. 20 Purchased 900 shares of Ford Motor Co. at $27 per share plus a $130 commission. Feb. 9 Purchased 2,400 shares of Lucent at $40 per share plus a $200 comission. Oct. 12 Purchased 700 shares of Z-Seven at $7.10 per share plus a $95 comission. Dec. 31 Fair value of the short-term investments in trading securities is $131, 100. 2018 Apr. 15 Sold 900 shares of Ford Motor Co. at $29 per share less a $300 commission. July 5 Sold 700 shares of Z-Seven at $10.75 per share less = $90 commission. July 22 Purchased 2,000 shares of Hunt Corp. at $38 per share plus a $225 commission. Aug. 19 Purchased 2,000 shares of Donna Karan at $48.00 per share plus a $100 comission. Dec. 31 Fair value of the short-term investments in trading securities is $262,925. 2019 Feb. 27 Purchased 3,900 shares of HCA at $35 per share plus a $440 commission. Mar. 3 Sold 2,000 shares of Hunt at $33 per share less a $125 commission. June 21 Sold 2,400 shares of Lucent at $37.75 per share less a $42 commission. June 30 Purchased 1,200 shares of Black & Decker at $47.50 per share plus a $590 commission Nov. 1 Sold 2,000 shares of Donna Karan at $48.00 per share less a $119 commission. Dec. 31 Fair value of the short-term investments in trading securities is $200,100. Required: Prepare journal entries to record these short-term investment activities for the years shown. On December 31 of each year, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round your intermediate calculations.) Complete this question by entering your answers in the tabs below. 2017 2018 2019 Prepare journal entries to record these short-term investment activities for the years shown on December 31 of each year prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities. View transaction list

Answer 1

2017
Date	General Journal	Debit	Credit
Jan-20	Short-term investments-Trading (Ford Motor Co.)	24430
	Cash [(900 x $27) + $130]		24430
Feb-09	Short-term investments-Trading (Lucent)	96200
	Cash [(2400 x $40) + $200]		96200
Oct-12	Short-term investments-Trading (Z-Seven)	5065
	Cash [(700 x $7.10) + $95]		5065
Dec-31	Fair value adjustment-Trading (ST)	5405
	Unrealized gain-Income		5405

Working:

Investment	Cost $	Fair Value $	Unrealized gain (loss) $
Ford Motor Co.	24430
Lucent	96200
Z-Seven	5065
Total $	125695	131100	5405

2018
Date	General Journal	Debit	Credit
Apr-15	Cash [(900 x $29) - $300]	25800
	Gain on sale of short-term investments		1370
	Short-term investments-Trading (Ford Motor Co.)		24430
Jul-05	Cash [(700 x $10.75) - $90]	7435
	Gain on sale of short-term investments		2370
	Short-term investments-Trading (Z-Seven)		5065
Jul-22	Short-term investments-Trading (Hunt)	76225
	Cash [(2000 x $38) + $225]		76225
Aug-19	Short-term investments-Trading (D. Karan)	96100
	Cash [(2000 x $48.00) + $100]		96100
Dec-31	Unrealized loss-Income	11005
	Fair value adjustment-Trading (ST)		11005

Working:

Investment	Cost $	Fair Value $	Unrealized gain (loss) $
Lucent	96200
Hunt	76225
D. Karan	96100
Total $	268525	262925	-5600
Balance required in fair value adjustment (Cr.)			5600
Existing balance in fair value adjustment (Dr.)			5405
Adjustment (Cr.)			11005

2019
Date	General Journal	Debit	Credit
Feb-27	Short-term investments-Trading (HCA)	136940
	Cash [(3900 x $35) + $440]		136940
Mar-03	Cash [(2000 x $33) - $125]	65875
	Loss on sale of short-term investments	10350
	Short-term investments-Trading (Hunt)		76225
Jun-21	Cash [(2400 x $37.75) - $42]	90558
	Loss on sale of short-term investments	5642
	Short-term investments-Trading (Lucent)		96200
Jun-30	Short-term investments-Trading (Black & Decker)	57590
	Cash [(1200 x $47.50) + $590]		57590
Nov-01	Cash [(2000 x $48.00) - $119]	95881
	Loss on sale of short-term investments	219
	Short-term investments-Trading (D. Karan)		96100
Dec-31	Fair value adjustment-Trading (ST)	11170
	Unrealized gain-Income		11170

Working:

Investment	Cost $	Fair Value $	Unrealized gain (loss) $
HCA	136940
Black & Decker	57590
Total $	194530	200100	5570
Balance required in fair value adjustment (Dr.)			5570
Existing balance in fair value adjustment (Cr.)			5600
Adjustment (Dr.)			11170

Note: Kindly select "No journal entry required" wherever required for other than the entries given.