Determining the long-term investment activity


Response to the following problem:

Shaq Security, which began operations in 2011, invests in long-term available-for-sale securities. Following is a series of transactions and events determining its long-term investment activity.

2011

Jan. 20 Purchased 900 shares of Johnson & Johnson at $18.75 per share plus a $590 commission.

Feb. 9 Purchased 2,200 shares of Sony at $46.88 per share plus a $2,578 commission.

June 12 Purchased 500 shares of Mattel at $55.50 per share plus an $832 commission.

Dec. 31 Per share fair values for stocks in the portfolio are Johnson & Johnson, $20.38; Mattel, $57.25; Sony, $39.

2012

Apr. 15 Sold 900 shares of Johnson & Johnson at $21.75 per share less a $685 commission.

July 5 Sold 500 shares of Mattel at $49.13 per share less a $491 commission.

July 22 Purchased 1,600 shares of Sara Lee at $36.25 per share plus a $1,740 commission.

Aug. 19 Purchased 1,800 shares of Eastman Kodak at $28 per share plus a $1,260 commission.

Dec. 31 Per share fair values for stocks in the portfolio are: Kodak, $31.75; Sara Lee, $30.00; Sony, $36.50. 2013 Feb. 27 Purchased 3,400 shares of Microsoft at $23.63 per share plus a $1,606 commission.

June 21 Sold 2,200 shares of Sony at $40.00 per share less a $2,640 commission.

June 30 Purchased 1,200 shares of Black & Decker at $47.50 per share plus a $1,995 commission.

Aug. 3 Sold 1,600 shares of Sara Lee at $31.25 per share less a $1,750 commission.

Nov. 1 Sold 1,800 shares of Eastman Kodak at $42.75 per share less a $2,309 commission.

Dec. 31 Per share fair values for stocks in the portfolio are: Black & Decker, $56.50; Microsoft, $28.

Required:

1. Prepare journal entries to record these transactions and events and any year-end fair value adjustments to the portfolio of long-term available-for-sale securities.

2. Prepare a table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value of the portfolio of long-term available-for-sale securities at each year-end.

3. Prepare a table that summarizes (a) the realized gains and losses and (b) the unrealized gains or losses for the portfolio of long-term available-for-sale securities at each year-end.

Request for Solution File

Ask an Expert for Answer!!
Accounting Standards: Determining the long-term investment activity
Reference No:- TGS02945844

Expected delivery within 24 Hours