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Smith Co. journal entries

Smith Co. has the following securities in its portfolio of trading equity securities on 12/31/10:

Cost Fair Value

5000 shares of johnson corp, common 155,000 139,000
10000 shares of simpson common 182,000 190,000

Total 337,000 329,000

All of the seurities had been purchased in 2010. In 2011, Smith completed the following securities transactions:

3/1 sold 5000 shares of johnson, common @ $31 less fees of $1500
4/1 bought 600 shares of Candy company, common @ $45 plus fees of $550

Smith Co portfolio of trading equity securities appeared as follows on 12/31/11:

Cost Fair Value
10,000 shares Simpson common 182,000 195,500
600 shares of Candy Co. common 27,500 25,500

Total 209,550 221,000

Prepare the general journal entries for Smith Co.

a. the 2010 adjusting entry
b. the sale of the Johnson stock
c. the purchase of the Candy Co. stock
d. the 2011 adjusting entry

Solution Preview

a)
Unrealized gain or loss - income 8,000
Fair Value adjustment, securities 8,000
(computed by 337-329)

b)
Cash ...

Solution Summary

The solution provides the journal entries for Smith Co. for the 2010 adjusting entry, the sale of stock, the purchase of stock, and the 2011 adjusting entry.

$2.19