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Fair Value Journal Entries, Available-for-Sale Investments

Lipscomb Inc. purchased a portfolio of available-for-sale securities in 2014, its first year of operations. The cost and fair value of this portfolio on December 31, 2014, was as follows:

Name Number of Shares Total Cost Total Fair Value
Jasper, Inc. 1,200 $16,080 $17,850
Parker Corp. 700 22,960 25,030
Smithfield Corp. 350 10,850 10,310
Total $49,890 $53,190

On May 10, 2015, Lipscomb purchased 500 shares of Violet Inc. stock at $31 per share plus a $130 brokerage fee.

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Provide the journal entries to record the following:

The adjustment of the available-for-sale security portfolio to fair value on December 31, 2014.

The May 10, 2015, purchase of Violet Inc. stock.

2014 Dec. 31

2015 May 10

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Tod Thiel
Tod ThielLv2
30 Sep 2019

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Fair Value jourrnal entries, trading inestments

Jets Bancorps Inc. purchased a portfolio of trading securitiesduring 2014. The cost and fair value of this portfolio on Dec. 31,2014 was as follows:

Name # ofshares TotalCost Total Fair Value

DolphinsInc. 1,400 $28,000 $30,800

MarinoCo. 1,200 30,000 27,600

NamathCo. 800 28,000 26,400

------------------- -------------------

$86,000 $84,800

On May 10, 2015, Jets Bancorp Inc. purchased 1,000 shares ofGiants Inc. at 24 per share plus $150 brokerage fee. Provide thejournal entries to record the following:

a. The adjustment of the trading security portfolio to fairvalue on Dec. 31, 2014.

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Fair value journal entries, trading investments

Last Unguaranteed Financial Inc. purchased the following tradingsecurities during 2014, its first year of operations:

Name Number ofShares Cost

Arden EnterprisesInc. 5,000 $150,000

French Broad IndustriesInc. 2,750 66,000

Pisgah ConstructionInc. 1,600 104,000

Total $320,000

The market price per share for the trading security portfolio onDec. 31, 2014, was as follows:

Market price per share,

Dec. 31, 2014

Arden EnterprisesInc. $ 34

French Broad IndustriesInc. $ 26

Pisgah ConstructionInc. $60

a. Provide the journal entry to adjust the trading securityportfolio to fair value on Dec. 31, 2014.

b. Assume the market prices of the portfolio were the same onDec. 31, 2015, as they were on Dec. 31, 2014. What would be thejournal entry to adjust the portfolio to fair value?

Last Unguaranteed Financial Inc. purchased the following tradingsecurities during 2014, its first year of operations: Name Numberof Shares Cost Arden Enterprises Inc. 5,shares $150,000 FrenchBroad Industries Inc. 2,750 shares 66,000 Pisgah Construction Inc.1,600 shares $104,000 Total $320,000 The market price per share forthe trading security portfolio on Dec. 31, 2014, was as follows:Market price per share, Dec. 31, 2014 Arden Enterprises Inc. $ 34French Broad Industries Inc. $ 26 Pisgah Construction Inc. $ 60 a.Provide the journal entry to adjust the trading security portfolioto fair value on Dec. 31, 2014. b. Assume the market prices of theportfolio were the same on Dec. 31, 2015, as they were on Dec. 31,2014. What would be the journal entry to adjust the portfolio tofair value? Comment Fair value journal entries, trading investmentsLast Unguaranteed Financial Inc. purchased the following tradingsecurities during 2014, its first year of operations: Name Numberof Shares Cost Arden Enterprises Inc. 5,000 $150,000 French BroadIndustries Inc. 2,750 66,000 Pisgah Construction Inc. 1,600 104,000Total $320,000 The market price per share for the trading securityportfolio on Dec. 31, 2014, was as follows: Market price per share,Dec. 31, 2014 Arden Enterprises Inc. $ 34 French Broad IndustriesInc. $ 26 Pisgah Construction Inc. $ 60

a. Provide the journal entry to adjust the trading securityportfolio to fair value on Dec. 31, 2014.

b. Assume the market prices of the portfolio were the same onDec. 31, 2015, as they were on Dec. 31, 2014. What would be thejournal entry to adjust the portfolio to fair value?

E17-15

(Equity InvestmentsTrading) Kenseth Company has the followingsecurities in its trading port- folio of securities on December 31,2013.

Investments(Trading) Cost Fair Value

1,500 shares of Gordon, Inc., Common $73,500 $ 69,000

5,000 shares of Wallace Corp.,Common 180,000 175,000

400 shares of Martin, Inc.,Preferred 60,000 61,600

$313,500 $305,600

All of the securities were purchased in 2013.

In 2014, Kenseth completed the following securitiestransactions.

March 1Sold the 1,500 shares ofGordon, Inc., Common, @ $45 less fees of $1,200

April 1 Bought 700 sharesof Earnhart Corp., Common, @ $75 plus fees of $1,300

Kenseth Companys portfolio of trading securities appeared asfollows on December 31, 2014

Investments(Trading) Cost Cost Fair Value

5,000 shares of Wallace Corp.,Common $180,000 $175,000

700 shares of Earnhart Corp.Common 53,800 $50,400

400 shares of Martin, Inc.Preferred 60,000 $58,000

293,800 283,400

Instructions

Prepare the general journal entries for Kenseth Company for:

(a)The 2013 adjusting entry.

(b) The sale of the Gordon stock.

(c)The purchase of the Earnhart stock.

(d) The 2014 adjusting entry for the trading portfolio

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