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