Question

Grass Security, which began operations in 2017, invests in long-term available-for-sale securities. Following is a series of transactions and events determining its long-term investment activity. 2017 Jan. 20 Purchased 1,000 shares of Johnson & Johnson at $20.50 per share plus a $240 commission. d 1, 200 shares of Sony at $46.20 per share plus a $225 commission. June 12 Purchased 1,500 shares of Mattel at $27.00 per share plus a $195 commission. Dec. 31 Per share fair values for stocks in the portfolio are Johnson & Johnson, $21.50; Mattel, $30.90; and Sony, $38. 2018 Apr. 15 Sold 1,000 shares of Johnson & Johnson at $23.50 per share less a $525 commission. July 5 Sold 1,500 shares of Mattel at $23.90 per share less a 1235 commission. July 22 Purchased 600 shares of Sara Lee at $22.50 per share plus a $480 commission. Aug. 19 Purchased 900 shares of Eastman Kodak at $17 per share plus a $198 commission. Dec. 31 Per share fair values for stocks in the portfolio are: Kodak, $19.25; Sara Lee, $20.00; and Sony $35.00. 2019 Feb. 27 Purchased 2,400 shares of Microsoft at $67.00 per share plus a $525 commission. June 21 Sold 1, 200 shares of Sony at $48.00 per share less an $880 commission. June 30 Purchased 1,400 shares of Black & Decker at $36.00 per share plus a $435 commission. Aug. 3 Sold 600 shares of Sara Lee at $16.25 per share less a $435 commission. Nov. 1 Sold 900 shares of Eastman Kodak at $22.75 per share less a $625 commission. Dec. 31 Per share fair values for stocks in the portfolio are: Black & Decker, $39.00; and Microsoft, $69.00

Answer 1

1) Journal Entries
Date	Account titles	Debit	Credit
2017
Jan.20	Long-Term Investments—AFS (J&J) (1000 x $20.50) + 240	20740
	Cash		20740
	Purchased Johnson & Johnson shares
Feb.9	Long-Term Investments—AFS (Sony).(1200 x $46.20) +225	55665
	Cash		55665
	Purchased Sony shares
June.12	Long-Term Investments—AFS (Mattel) (1500 x $27) + $195	40695
	Cash		40695
	Purchased Mattel shares
Dec.31	Unrealized Loss - Equity	3650
	Market Adjustment—AFS (LT)		3650
	Annual adjustment to market values
		Cost	Fair Value	Difference
	j &j = 1000 x 21.50	20740	21500	760
	Sony = 1200 x 38	55665	45600	-10065
	Mattel = 1500 x 30.90	40695	46350	5655
	Total	117100	113450	-3650
2018
Apr.15	Cash	22975
	Gain on Sale of Investments		2235
	Long-Term Investments—AFS (J&J)		20740
	Sold Johnson & Johnson shares [(1,000 x $23.50) - $525]
Jul.5	Cash	35615
	Loss on Sale of Investments	5080
	Long-Term Investments—AFS (Mattel)		40695
	Sold Mattel shares [(1,500 x $23.90) - $235]
Jul.22	Long-Term Investments—AFS (Sara Lee) (600 x $22.50 + 480	13980
	Cash		13980
	Purchased Sara Lee shares
Aug.19	Long-Term Investments—AFS (Eastman Kodak	15498
	Cash		15498
	Purchased Eastman Kodak shares [(900 x $17 + $198)
Dec. 31	Unrealized Loss - Equity	10168
	Market Adjustment—AFS (LT)		10168
	Annual adjustment to market values
		Cost	Fair value	Profit/loss
	Kodak	15498	17325	1827
	Sara lee	13980	12000	-1980
	Sony	55665	42000	-13665
				-13818
	Fair Value Adjustment account:
	Required balance	13818	cr.
	Unadjusted balance	3650	cr.
	Required change	10168	cr.
2019
Feb.27	Long-Term Investments—AFS (Microsoft)	161325
	Cash		161325
	Purchased Microsoft shares [(2400 x $67.00) + $525]
June. 21	Cash	56720
	Gain on Sale of Investments		1055
	Long-Term Investments—AFS (Sony)		55665
	Sold Sony shares [(1,200 x $48.00) - $880].
jun. 30	Long-Term Investments—AFS (Black & Decker)	50835
	Cash		50835
	Purchased Black & Decker shares [(1,400 x $36.00) + $435]
Aug.3	Cash	9315
	Loss on Sale of Investments	4665
	Long-Term Investments—AFS (Sara Lee)		13980
	Sold Sara Lee shares [(600 x $16.25) - $435]
Nov.1	Cash	19850
	Gain on Sale of Investments		4352
	Long-Term Investments—AFS (E. Kodak)		15498
	Sold Eastman Kodak shares [(900 x $22.75) - $625]
Dec.31	Market Adjustment—AFS (LT)	21858
	Unrealized Loss—Equity		13818
	Unrealized Gain—Equity		8040
	Annual adjustment to market values
		Cost	Fair market	difference
	Black & Decker	50835	54600	3765
	Microsoft	161325	165600	4275
	Total			8040
	Fair Value Adjustment account:
	Required balance .	8040	dr
	Unadjusted balance	13818	cr.
	Required change	21858	dr.