Question

the following has the following securities in its portfolio on December 31, 2017. None of these investments are accounted for under the equity method Fair Value Investments Cost 1,500 shares of Gordon, Inc., Common $77,600 $73,200 5,000 shares of Wallace Corp., Common 172,900 167,700 65,100 400 shares of Martin, Inc., Preferred 63,500 $314,000 $306,000 All of the securities were purchased in 2017. In 2018, Sandhill completed the following securities transactions. March 1 Sold the 1,500 shares of Gordon, Inc, Common, a $45 less fees of $1,200 April 1 Bought 700 shares of Earnhart Corp., Common, $75 plus fees of $1,300. Sandhill's portfolio of equity securities appeared as follows on December 31, 2018. Fair Value Investments Cost 5,000 shares of Wallace Corp., Common $172,900 $167,700 53,800 50,100 700 shares of Earnhart Corp, Common 400 shares of Martin Inc., Preferred 63,500 61,700 $290,200 $279,500 Prepare the general journal entries for Sandhill Company for:

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Answer 1

Solution:

1) 12-31-2017

Unrealized Holding Gain or Loss—Income. ................................... 8,000

Securities Fair Value Adjustment (Trading). ...................... 8,000

($314,000 – $306,000)

2) 03-01-2018

Cash [(1,500 × $45) – $1,200]. ...................................................... 66,300

Loss on Sale of Securities. ............................................................. 1,200

Trading Securities. .............................................................. 67,500

3) 4-1-18

Trading Securities. .......................................................................... 53,800

Cash [(700 × $75) + $1,300]. ................................................ 53,800

4) 12-31-18

Securities Fair Value Adjustment (Trading). .................................. 10,700

Unrealized Holding Gain or Loss—Income. ....................... 10,700

(290,200 - 279,500)