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    Equity Investments - Available for Sale - Kings Holdings

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    Kings Holdings, Inc. had the following available-for-sale investment portfolio at January 1, 2010.
    1,000 shares of Fur Company at $15.00 per share $15,000
    900 shares of Roy Company at $20.00 per share $18,000
    500 shares of Chase Company at $9.00 per share $4,500
    Available-for-sale securities at cost: $37,500
    Securities fair value adjustment-Available-for-sale - Credit balance ($7,500)
    Available-for-sale securities at fair value: $30,000

    During 2010, the following transactions took place:
    1. On March 1, Roy Company paid a $2.00 per share dividend.
    2. On April 30, Kings Holdings, Inc. sold 300 shares of Chase Company
    for $11.00 per share
    3. On May 15, Kings Holding, Inc. purchased 100 more shares of Fur Co.
    stock at $16.00 per share
    4. At December 31, 2010, the stocks had the following price per share values:
    Fur Company $17.00
    Roy Company $19.00
    Chase Company $8.00
    During 2011, the following transactions took place:
    5. On February 1, Kings Holding, Inc. sold the remaining Chase shares for $8
    per share.
    6. On March 1, Roy Company paid a $2 per share dividend.
    7. On December 21, Fur Company declared a cash dividend of $3 per share to be
    paid in the next month.
    8. At December 31, 2011, the stocks had the following price per share values:
    Fur Company $19
    Roy Company $21.00

    Instructions:
    (a) Prepare journal entries for each of the above transactions.

    1 Mar 1, 10 Cash 1,800
    Dividend Revenue Amount

    2 Apr 30, 10 Cash 3,300
    Account Title Amount
    Account Title Amount

    3 May 15, 10 Account Title Amount
    Account Title Amount

    4 Dec 31, 10 Securities Fair Value Adjustment Amount

    Unrealized Holding Gain or Loss-Equity Amount

    Security Cost "Fair
    Value" "Unrealized
    Gain (Loss)"
    Fur Company ($15,000 + $1,600) 16,600
    Calculation as desired Formula Formula
    Roy Company Formula
    Calculation as desired Formula Formula
    Chase Company Formula
    Calculation as desired Formula Formula
    Total of Portfolio Formula Formula Formula
    Previous securities fair value adjustment bal.â?"Cr. Amount
    Securities fair value adjustmentâ?"Dr. Formula

    5 Feb 1, 11 Account Title Amount
    Account Title Amount
    Account Title Amount

    6 Mar 1, 11 Cash Amount
    Account Title Amount

    7 Dec 21, 11 Dividend Receivable Amount
    Account Title Amount

    8 Dec 31, 11 Securities Fair Value Adjustment Amount

    Account Title Amount

    Security Cost "Fair
    Value" "Unrealized
    Gain (Loss)"
    Fur Company 16,600 Formula
    Calculation as desired Formula Formula
    Roy Company Formula Formula
    Calculation as desired Formula Formula
    Total of Portfolio Formula Formula Formula
    Previous securities fair value adjustment bal.â?"Cr. Amount
    Securities fair value adjustmentâ?"Dr. Formula

    (b) Prepare a partial balance sheet showing the Investments account at December 31, 2010 and 2011.

    Partial Balance Sheet as of: December 31, 2010 December 31, 2011
    Current Assets - Dividends Receivable Amount Amount
    Investments:
    Available-for-sale securities, at fair value Amount Amount
    Stockholders' equity:
    Accumulated other comprehensive gain Amount Amount

    © BrainMass Inc. brainmass.com April 3, 2020, 10:29 pm ad1c9bdddf
    https://brainmass.com/business/issuing-equity/equity-investments-available-for-sale-kings-holdings-444213

    Attachments

    Solution Summary

    The solution computes unrealized gain or loss on Equity Investments - Available for Sale.

    $2.19

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