-7 (Trading Securities Entries) On December 21, 2013, Bucky Katt Company provided you withthe following information regarding its trading securities
31-Dec-06Investments (Trading)CostFair ValueUnrealized Gain (Loss)Clemson Corp. stock20,00019,000-1,000Colorado Co. stock10,0009,000-1,000Buffaloes Co. stock20,00020,600600Total of portfolio50,00048,600-1,400
Previous securities fair value adjustment balance0Securities fair value adjustment—Cr.-1,400During 2014, Colorado Company stock was sold for $9,400. The fair value of the stock on December 31,2014, was: Clemson Corp. stock—$19,100; Buffaloes Co. stock—$20,500.Instructions
(a) Prepare the adjusting journal entry needed on December 31, 2013
.(b) Prepare the journal entry to record the sale of the Colorado Company stock during 2014
.(c) Prepare the adjusting journal entry needed on December 31, 2014.
Answer:
| Number | Description | Debit $ | Credit $ |
| (A) | Unrealized Holding Gain or Loss – Income | 1400 | |
| Dec-31-2013 | Securities Fair Value Adjustment – Trading | 1400 | |
| (20500-19100) | |||
| (B) | Cash | 9400 | |
| 2014 | Loss on Sale of Securities | 600 | |
| Trading Securities | 10,000 | ||
| ( c) | Securities Fair Value Adjustment – Trading | 1000 | |
| Dec -31-2014 | Unrealized Holding Gain or Loss – Income | 1000 |
