ORIE_3150_Homework__6_Solutions

ORIE_3150_Homework_ - ORIE 3150 Homework#6 Due Tuesday Please print your section number on your homework submission You may wish to retain a copy

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ORIE 3150 Homework #6 Due Tuesday, October 28, 2008. Please print your section number on your homework submission. You may wish to retain a copy of this homework, as it will not be returned to you prior to the second prelim. 1. Joyful Elf Company purchased 1,000 shares of Traskar Inc. for $20 per share on November 6, 2004. The shares were regarded as trading securities. On December 31, 2004, Joyful Elf’s fiscal year end, the market value of the Traskar shares was $12 per share. On February 20, 2005, Traskar paid a cash dividend of $1.50 per share to all shareholders. On April 17, 2005, Joyful Elf sold the entire Traskar investment for $17 per share. a. Provide Joyful Elf’s December 31, 2004 journal entry related to the Traskar investment. Dec. 31, 2004 Holding Loss, TS (tSE) 8,000 Investment, TS 8,000 b. Provide Joyful Elf’s February 20, 2005 journal entry related to the Traskar investment. Feb. 20, 2005 Cash 1,500 Investment Revenue 1,500 c. Provide Joyful Elf’s April 17, 2005 journal entry related to the Traskar investment. Apr. 17, 2005 Cash 17,000 Investment 12,000 Gain on Sale 5,000 d. What income (or loss) did Joyful Elf show in fiscal 2004 related to the Traskar investment? $8,000 loss What income (or loss) did Joyful Elf show in fiscal 2005 related to the Traskar investment? $6,500 total gain/income
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2. Geico Insurance Corp. acquired 200,000 shares of flickr.com common stock on December 8, 2006 for $21.25 per share including brokerage fees. The shares were regarded as available for sale securities. The market value of the shares was $22.40 on December 31, 2006, the fiscal year end for Geico Insurance Corp. You may assume the appropriate accounting entries (if any) were made on December 31. On January 3, 2007,
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This note was uploaded on 11/03/2008 for the course ORIE 315 taught by Professor Callister during the Fall '08 term at Cornell University (Engineering School).

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ORIE_3150_Homework_ - ORIE 3150 Homework#6 Due Tuesday Please print your section number on your homework submission You may wish to retain a copy

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