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Shatana Bentley-AC301-Unit9-Assignment

Shatana Bentley-AC301-Unit9-Assignment - E15-4...

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At the beginning of 2010, Ace Company had the following portfolio of investments in available-for-sale securities (common stock): 12/31/2009 Security Cost Fair Value A $20,000 $25,000 B 30,000 29,000 Totals $50,000 $54,000 During 2010 the following transactions occurred: May 3 Purchased C securities (common stock) for $13,500 July 16 Sold all of the A securities for $25,000 Dec. 31 Received dividends of $800 on the B and C securities, for which the following information was available: 12/31/2010 Security Fair Value B $32,000 C 15,500 Required 1. Prepare journal entries to record the preceding information. 2. What is the balance in the Unrealized Increase/Decrease account on December 31, 2010? E15-4 Available-for-Sale Securities
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Name: Shatana Bentley An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Prepare journal entries to record the preceding information. 2. What is the balance in the Unrealized Increase/Decrease account on December 31, 2010? May 3, 2010 (record the purchase of securities) Investment in Available-for-Sale Securities 13,500 Cash 13,500 July 16, 2010 (record the receipt of cash and gain/loss from sale of A securities) Cash 25,000 Investment in Available-for-Sale Securities 20,000 Gain on Sale of Available-for-Sale Securities 5,000 July 16, 2010 (record the recognition of realized gain/loss) Unrealized Inc/Dec in Value of Available-for-Sale Securities 5,000 Allowance for Change in Value of Investment 5,000 December 31, 2010 (record the cash dividends received) Cash 800 Dividend Revenue 800 Cumulative 12/31/09 Change in Security Cost Fair Value Fair Value A Company common stock $20,000 $25,000 $5,000 B Company common stock 30,000 29,000 (1,000) Totals $50,000 $54,000 $4,000 Cumulative 12/31/10 Change in Security Cost Fair Value Fair Value B Company common stock $30,000 $32,000 $2,000 C Company common stock 13,500 15,500 2,000 Totals $43,500 $47,500 $4,000 Complete the following "T" accounts by summarizing the journal entries and change in fair value tables above. Allowance for Change in Value of Inv. Beginning Balance, 1/1/10 4,000 July 16, 2010 5,000 December 31, 2010 5,000 Ending Balance, 12/31/10 4,000 Unrealized Increase/Decrease in Value Beginning Balance, 1/1/10 4,000 July 16, 2010 5,000 December 31, 2010 5,000 Ending Balance, 12/31/10 4,000 December 31, 2010 (record unrealized holding gain/loss on securities, use the above "T" accounts to complete this entry) Allowance for Change in Value of Investment 5,000 Unrealized Inc/Dec in Value of Available-for-Sale Securities 5,000 E15-4 Available-for-Sale Securities
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Name: Solutions An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Prepare journal entries to record the preceding information.
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