Question

Exercise 17-7 On December 21, 2017, Sheffield Company provided you with the following information regarding its equity investments. December 31, 2017 Investments (Trading) Cost_ Fair Value Unrealized Gain (Loss) Clemson Corp. stock $21,900 $20,900 $(1,000) Colorado Co. stock 10,100 9,100 (1,000) Buffaloes Co. stock 21,900 22,480 580 Total of portfolio $53,900 $52,480 (1,420 ) Previous fair value adjustment balance Fair value adjustment-Cr. $(1,420) During 2018, Colorado Company stock was sold for $9,650. The fair value of the stock on December 31, 2018, was Clemson Corp. stock-$21,010; Buffaloes Co. stock-$22,380. None of the equity investments result in significant influence. (a) (b) (c) Prepare the adjusting journal entry needed on December 31, 2017. Prepare the journal entry to record the sale of the Colorado Co. stock during 2018. 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 o for the amounts.)

Answer 1

Answer
Riverbed Company
No.	General Journal	Debit	Credit
a.	Unrealized Holding gain or loss Dr	$     1,420
	To Fair Value Adjustment		$       1,420
	(To record Unrealized gain or loss)
b.	Cash Dr	$     9,650
	Loss on Sale of Investment	$        450
	To Trading Investments		$     10,100
	(To record sale )
c.	Fair Value Adjustment Dr (Note)	$     1,010
	To Unrealized Holding gain or loss		$       1,010
	(To record Unrealized gain or loss )

Working Note
Computation of Unrealized gain or loss on December 31, 2018
Investment (Trading)	Cost	Fair Value at Dec 31 2018	Unrealized holding Gain (Loss)
Clemson Corp.	$     21,900	$                              21,010	-$                                            890
Buffaloes co.	$     21,900	$                              22,380	$                                            480
Total			-$                                            410
Previous fair value adjustment balance			$                                         1,420
Fair Value adjustment 2018			$                                         1,010