AC 302 Chapter 17 Problem Question 5

AC 302 Chapter 17 Problem Question 5
Name				Date		
Instructor				Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P17-5 (Equity Securities Entries and Disclosures) Parnevik Company has the following securities in its investment portfolio on December 31, 2012 (all securities were purchased in 2012):						
						
3,000 	shares of Anderson Co. common stock which cost					$58,500 
10,000 	shares of Munter Ltd. common stock which cost					$580,000 
6,000 	shares of King Company preferred stock which cost					$255,000 
The Securities Fair Value Adjustment account shows a credit of					$10,100 	at the end
of 2012.						
In 2013, Parnevik completed the following securities transactions.						
1. On January 15, sold		3,000 	shares of Anderson- common stock at			$22 
per share less fees of		$2,150 				
2. On April 17, purchased		1,000 	shares of Castle- common stock at			$33.50 
per share plus fees of		$1,980 				
On December 31, 2013, the market values per share of these securities were:						
	Munter Ltd.		$61.00 			
	King Co.		$40.00 			
	Castle Co.		$29.00 			
In addition, the accounting supervisor of Parnevik told you that, even though all these securities have readily determinable fair values, Parnevik will not actively trade these securities because the top management intends to hold them for more than one year.						
						
						
						
Instructions:						
(a) Prepare the entry for the security sale on January 15, 2013.						
						
	Text Title				Amount	
	Text Title				Amount	
	Text Title				Formula	
	Text Title				Amount	
	Text Title				Formula	
						
Jan 15, 13	Account Title			Amount		
	Account Title				Amount	
	Account Title				Amount	
						
(b) Prepare the journal entry to record the security purchase on April 17, 2013.						
						
	Total purchase price is:					
	Text title				Quantity	
	Text title				Amount	
	Text title				Formula	
	Text title				Amount	
	Text title				Formula	
						
Apr 17, 13	Account Title			Amount		
	Account Title				Amount	
						
"(c) Compute the unrealized gains or losses and prepare the adjusting entry for Parnevik on
     December 31, 2013."						
						
						
	Available-for-Sale Portfolio—December 31, 2013					
	Securities		Cost	"Fair
Value"	"Unrealized
Gain
(Loss)"	
	Munter Ltd.		Amount	Amount	Formula	
	King Co.		Amount	Amount	Formula	
	Castle Co.		Amount	Amount	Formula	
	Total of portfolio		Formula	Formula	Formula	
	Previous securities fair value adjustment balance—Cr.				Amount	
	Securities fair value adjustment—Dr.				Formula	
						
Dec 31, 13	Account Title				Amount	
	Account Title					Amount
						
(d) How should the unrealized gains or losses be reported on Parnevik- balance sheet?						
						
Enter text answer as appropriate.