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Problem #2 Avalon Corp Trading Securities

Part Two- Problem 2

Avalon Corp had the following transactions relating to their trading securities portfolio. This is the first year that they have made these investments.

February 1st- Bought 1,000 shares of IBM for $75 per share and paid brokerage fees of

April 1st- Bought $100,000 of 8% U.S. Treasury Bonds at 103, plus accrued interest. The
semi-annual interest dates are January 1st and July 1st. Avalon uses the
revenue approach to record the accrued interest. There were no brokerage

July 1st- Received the semi-annual interest on the US Treasury Bonds.

August 15th- Sold 500 shares of the IBM stock for $85 per share and paid brokerage fees
of $500.

December 31st- Recorded the accrued interest on the US Treasury bonds.

December 31st- The market value of the IBM stock is $83, and the US Treasury Bonds
are selling for 101.5

Required: Make all of the journal entries related to these investments.

Solution Summary

Your response is in Excel showing the journal entries and the unrealized gain/loss at year end and the resulting required entry.