Omar Corporation, which has begun investing in trading securities, engaged in the following transactions:
Jan. 6 Purchased 7,000 shares of Quaker Oats stock, $30 per share. Feb. 15 Purchased 9,000 shares of EG&G, $22 per share.
At year-end on June 30, Quaker Oats was trading at $40 per share, and EG&G was trading at $18 per share.
Required
1. Prepare journal entries to record the purchases.
2. Record the necessary year-end adjusting entry. (Include a schedule of the trading portfolio cost and market in the explanation.)
3. Prepare the journal entry to record the sale of all the EG&G shares on August 20 for $16 per share. Is this entry affected by the June 30 adjustment?