Question - McElroy Company has the following portfolio of investment securities at September 30, 2010, its last reporting date.
Trading Securities Cost Fair Value
Horton, Inc. common (5000 shares) $215,000 $200,000
Monty, Inc. preferred (3500 shares) 133,000 140,000
Oakwood Corp. common (1000 shares) 180,000 179,000
On October 10, 2010, the Horton shares were sold at a price of $54 per share. In addition, 3000 shares of Patriot common stock were acquired at $54.50 per share on November 2, 2010. The December 31, 2010, fair value: Monty $106,000, Patriot $132,000, and the Oakwood common $193,000. All the securities are classified as trading.
Instructions
(a) Prepare the journal entries to record the sale, purchase, and adjusting entries related to the trading secures in the last quarter of 2010.
(b) How would the entries in part(a) change if the securities were classified as available-for-sale?