Problem:
Tennant Security, which began operations in 2009, invests in Long-term available-for-sale securities. Folloing is a series of transactions and events determining its long-term investment activity.
2009:
Jan.20 Purchased 1,200 shares of Johnson& Johnson at $20.50 per share plus a $240 commission.
Feb.9 Purchased 1,000 shares of Sony at $46.20 per share plus a $220 commission.
June 12. Purchased 1,700 shares of Mattel at $28 per share plus a $ 195 commission.
Dec. 31. Per share market values for stocks in the portfolio are Johnson & Johnson, $21.50; Mattel, $26.50; Sony,$38.
2010:
Apr. 15. Sold 1.200 shares of Johnson&Johnson at $23.50 per share less a $525 commission
July 5 Sold $1,700 shares of Mattel at $26.50 per share less a #235 commission
July 22 Purchased 500 shares of Sara Lee at $22.50 per share plus a $420 commission
Aug. 19 Purchased 900 shares of Eastern Kodak at $14 per share plus a $198 commission
Dec. 31 Per share market values for stocks in theportfolio are: Kodak $16.25; Sara Lee, $20.00; Sony, $35.00
2011
Feb. 27 Purchased 3,000 shares of Microsoft at $65 per share plus a $520 commisson
June 21 Sold 1,000 shares of Sony at $48.00 per share less an $880 commission.
June 30 Purchased 1,500 shares of Black&Decker at $38 per share plus a $435 commission
Aug. 3 Sold 500 shares of Sra Lee at $16.25 per share less a $435 commission
Nov. 1 Sold 900 shares of Eeastern Kodak at $19.75 per share less a $625 commission
Dec. Per share market values for stocks in the portfolio are: BVlack & Decker, $41; Microsoft, $67.
Required to do:
Question 1: Prepare journal entries to record these transactions and events and any year-end market adjustments to the portfolio of long-term available-for-sale securities.
Question 2: Prepare a table that summarizes the (a) total cost, (b) total market adjustment (c) total market value of the portfolio of long-term available-for-sale securities at each year-end
Question 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.