Question

Skysong Company has the following portfolio of investment securities at September 30, 2020, its most recent reporting date. Investment Securities Horton, Inc. common (4,670 shares) Monty, Inc. preferred (3,740 shares) Oakwood Corp. common (950 shares) Cost Fair Value $205,480 $190,250 145,860 153,180 161,500 160,470 On October 10, 2020, the Horton shares were sold at a price of $56 per share. In addition, 3,290 shares of Patriot common stock were acquired at $58 per share on November 2, 2020. The December 31, 2020, fair values were Monty $119,590, Patriot $161,370, and Oakwood $173,950. Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit

Answer 1

Date	Particulars	Dr Amt	Cr Amt
10th October,2020	Dr Cash	261,520
	Cr Investment in Horton, Inc.		205,480
	Cr Profit on sale of investment		56,040
2nd November, 2020	Dr Patriot shares	190,820
	Cr Cash		190,820
31st December, 2020	Dr Decrease in value of investments	55,720
	Cr Monty, Inc.		26,270
	Cr Patriot Shares		29,450

Investments are carried at Cost or Net Realizable value whichever is lower. Hence shares of Monty and Patriot are adjusted to their carrying amount and shares of Oakwood Corp, are carried at cost as the NRV is greater than cost.