Available-for-Sale Securities
At the beginning of 2013, Ace Company had the followingportfolio of investments in available-for-sale securities (commonstock):
Security
Cost 12/31/12
Fair Value A $24,300 $28,800 B 28,400 27,300 Totals $52,700 $56,100
During 2013 the following transactions occurred:
May 3 Purchased C securities (commonstock) for $11,300. July 16 Sold all of the A securities for$28,800. Dec. 31 Received dividends of $700 on the Band C securities, for which the following information wasavailable:
12/31/13
Fair Value B $30,400 C 14,200
1. Prepare journal entries to record the preceding information.For compound entries, if an amount box does not require an entry,leave it blank.
2013 investments in available for sale securities $????? May 3 cash $????? July 16 cash $????? sale investments in available for sale securities $????? gain on sale of available for sale securities $????? July 16 unrealized holding gain/loss: available for salesecurities $????? adj allowance for change in fair value of investment $????? Dec 31 cash $????? divd dividend income $????? Dec 31 allowance for change in fair value of investment $????? adj unrealized holding gain/loss: available for salesecurities $?????
2. What is the balance in the Unrealized Holding Gain/Lossaccount on December 31, 2013?
$??????
Available-for-Sale Securities
At the beginning of 2013, Ace Company had the followingportfolio of investments in available-for-sale securities (commonstock):
| Security | Cost | 12/31/12 Fair Value |
| A | $24,300 | $28,800 |
| B | 28,400 | 27,300 |
| Totals | $52,700 | $56,100 |
During 2013 the following transactions occurred:
| May 3 | Purchased C securities (commonstock) for $11,300. |
| July 16 | Sold all of the A securities for$28,800. |
| Dec. 31 | Received dividends of $700 on the Band C securities, for which the following information wasavailable: |
| 12/31/13 Fair Value | |
| B | $30,400 |
| C | 14,200 |
1. Prepare journal entries to record the preceding information.For compound entries, if an amount box does not require an entry,leave it blank.
| 2013 | investments in available for sale securities | $????? | |
| May 3 | cash | $????? | |
| July 16 | cash | $????? | |
| sale | investments in available for sale securities | $????? | |
| gain on sale of available for sale securities | $????? | ||
| July 16 | unrealized holding gain/loss: available for salesecurities | $????? | |
| adj | allowance for change in fair value of investment | $????? | |
| Dec 31 | cash | $????? | |
| divd | dividend income | $????? | |
| Dec 31 | allowance for change in fair value of investment | $????? | |
| adj | unrealized holding gain/loss: available for salesecurities | $????? |
2. What is the balance in the Unrealized Holding Gain/Lossaccount on December 31, 2013?
$??????
Related questions
Glacier Products Inc. is a wholesaler of rock climbing gear. The company began operations on January 1, 2016. The following transactions relate to securities acquired by Glacier Products Inc., which has a fiscal year ending on December 31:
Record these transactions on page 10:
| 2016 | ||
|---|---|---|
| Jan. | 18 | Purchased 9,000 shares of Malmo Inc. as an available-for-sale investment at $40 per share, including the brokerage commission. |
| July | 22 | A cash dividend of $3.00 per share was received on the Malmo stock. |
| Oct. | 5 | Sold 500 shares of Malmo Inc. stock at $58.00 per share, less a brokerage commission of $100. |
| Dec. | 18 | Received a regular cash dividend of $3.00 per share on Malmo Inc. stock. |
| 31 | Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $36.00 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment. |
Record these transactions on page 11:
| 2017 | ||
|---|---|---|
| Jan. | 25 | Purchased an influential interest in Helsi Co. for $800,000 by purchasing 75,000 shares directly from the estate of the founder of Helsi. There are 250,000 shares of Helsi Co. stock outstanding. |
| July | 16 | Received a cash dividend of $3.00 per share on Malmo Inc. stock. |
| Dec. | 16 | Received a cash dividend of $3.00 per share plus an extra dividend of $0.20 per share on Malmo Inc. stock. |
| 31 | Received $38,000 of cash dividends on Helsi Co. stock. Helsi Co. reported net income of $170,000 in 2017. Glacier Products Inc. uses the equity method of accounting for its investment in Helsi Co. | |
| 31 | Malmo Inc. is classified as an available-for-sale investment and is adjusted to a fair value of $44 per share. Use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $36 to $44 per share. |
| Required: | |
| A. | Journalize the entries to record the preceding transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries. |
| B. | Prepare the investment-related asset and stockholdersâ equity balance sheet presentation for Glacier Products Inc. on December 31, 2017, assuming the Retained Earnings balance on December 31, 2017, is $700,000. Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. âLessâ or âPlusâ will automatically appear if it is required. For those boxes in which you must enter subtractive or negative numbers use a minus sign. |
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| Amount Descriptions | |
|---|---|
| Available-for-sale investments (at cost) | |
| Available-for-sale investments (at fair value) | |
| Net income | |
| Net loss | |
| Other comprehensive income (loss) | |
| Other income (loss) | |
| Trading investments (at cost) | |
| Trading investments (at fair value) |
Journalize the entries to record these transactions. Be sure to enter the year as part of the date for the first entry on each page. Refer to the information given and the Chart of Accounts provided for the exact wording of the answer choices for text entries.
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JOURNAL
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Prepare the investment-related asset and stockholdersâ equity balance sheet presentation for Glacier Products Inc. on December 31, 2017, assuming the Retained Earnings balance on December 31, 2017, is $700,000. Refer to the Chart of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. âLessâ or âPlusâ will automatically appear if it is required. For those boxes in which you must enter subtractive or negative numbers use a minus sign.
| GLACIER PRODUCTS, INC. |
| Balance Sheet (selected items) |
| December 31, 2017 |
| 1 | Current assets: | ||
| 2 | |||
| 3 | |||
| 4 | |||
| 5 | |||
| 6 | Investments: | ||
| 7 | |||
| 8 | |||
| 9 | Stockholdersâ equity: | ||
| 10 | |||
| 11 |
