Posted: September 18th, 2017

Problems

Problem 130

Perez Company began operations in 2013. Since then, it has reported the following gains and losses for its investments in trading securities on the income statement:

 2013 2014 2015 Gains (losses) from sale of trading securities \$14,900 \$(20,700) \$14,000 Unrealized holding losses on valuation of trading securities (25,700) â€• (14,400) Unrealized holding gain on valuation of trading securities â€• 10,300 â€•

At January 1, 2016, Perez owned the following trading securities:

 Cost BKD Common (16,000 shares) \$464,000 LRF Preferred (1,700 shares) 178,500 Drake Convertible bonds (100 bonds) 116,000

During 2016, the following events occurred:

 1 Sold 5,300 shares of BKD for \$180,200. 2 Acquired 900shares of Horton Common for \$39 per share. Brokerage commissions totaled Brokerage commissions totaled \$1,000.

At 12/31/16, the fair values for Perez’s trading securities were:

 BKD Common, \$28 per share LRF Preferred, \$110 per share Drake Bonds, \$1,030 per bond Horton Common, \$44 per share

 Balance in fair value adjustment account \$

Compute the aggregate cost and fair values for Perez’s trading securities portfolio at 12/31/16.

 Aggregate cost \$ Aggregate fair value \$

Prepare the necessary adjusting entry based upon your analysis in (b) above. (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 0 for the amounts.)

 Date Account Titles and Explanation Debit Credit 12/31/16

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