Assignment: Recording, adjusting, and reporting long-term available-for-sale securities
Grass Security, which began operations in 2015, invests in long-term available-for-sale securities. Following is a series of transactions and events determining its long-term investment activity.
2015
Jan. 20 Purchased 1,000 shares of Johnson & Johnson at $20.50 per share plus a $240 commission. Feb. 9 Purchased 1,200 shares of Sony at $46.20 per share plus a $225 commission.
June 12 Purchased 1,500 shares of Mattel at $27.00 per share plus a $195 commission.
Dec. 31 Per share fair values for stocks in the portfolio are Johnson & Johnson, $21.50; Mattel, $30.90; Sony, $38.
2016
Apr. 15 Sold 1,000 shares of Johnson & Johnson at $23.50 per share less a $525 commission. July 5 Sold 1,500 shares of Mattel at $23.90 per share less a $235 commission.
July 22 Purchased 600 shares of Sara Lee at $22.50 per share plus a $480 commission. Aug. 19 Purchased 900 shares of Eastman Kodak at $17 per share plus a $198 commission.
Dec. 31 Per share fair values for stocks in the portfolio are: Kodak, $19.25; Sara Lee, $20.00; Sony, $35.00.
2017
Feb. 27 Purchased 2,400 shares of Microsoft at $67.00 per share plus a $525 commission. June 21 Sold 1,200 shares of Sony at $48.00 per share less an $880 commission.
June 30 Purchased 1,400 shares of Black & Decker at $36.00 per share plus a $435 commission. Aug. 3 Sold 600 shares of Sara Lee at $16.25 per share less a $435 commission.
Nov. 1 Sold 900 shares of Eastman Kodak at $22.75 per share less a $625 commission.
Dec. 31 Per share fair values for stocks in the portfolio are: Black & Decker, $39.00; Microsoft, $69.00.
Required
1. Prepare journal entries to record these transactions and events and any year-end fair value adjustments to the portfolio of long-term available-for-sale securities.
2. Prepare a table that summarizes the (a) total cost, (b) total fair value adjustment, and (c) total fair value of the portfolio of long-term available-for-sale securities at each year-end.
3. Prepare a table that summarizes (a) the realized gains and losses and (b) the unrealized gains or losses for the portfolio of long-term available-for-sale securities at each year-end.