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Trading Securities Entries

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7. (Trading Securities Entries) On December 21, 2003, Tiger Company provided you
with the following information regarding its trading securities.

December 31, 2003

Investments (Trading) Cost Fair Value Unrealized Gain
(Loss)
Clemson Corp. stock $20,000 $19,000 $(1,000)
Colorado Co. stock 10,000 9,000 (1,000)
Buffaloes Co. stock 20,000 20,600 600

Total of portfolio $50,000 $48,600 (1,400)
Previous securities fair value -0-
adjustment balance
Securities fair value $(1,400)
adjustment-Cr.
During 2004, Colorado Company stock was sold for $9,400. The fair value of the stock on December 31, 2004, was: Clemson Corp. stock-$19,100; Buffaloes Co. stock-$20,500.

Instructions
a. Prepare the adjusting journal entry needed on December 31, 2003.

b. Prepare the journal entry to record the sale of the Colorado Company stock during
2004.

c. Prepare the adjusting journal entry needed on December 31, 2004.

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Solution Summary

The solution provides the journal entries to be made for adjustment at period end and sale of trading securities

Solution Preview

(a) At December 31, 2003 the unrealized loss in 1,400. The journal entry is
Unrealized Holding Gain or Loss-Income Dr 1,400
Securities Fair Value Adjustment (Trading) Cr 1,400

(b) The Colorado was sold for 9,400. The purchase price is ...

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