Prepare the journal entries to record the sale purchase and, Ask an Expert

Accounting

McElroy Company has the following port- folio of investment securities at September 30, 2010, its last reporting date.

Trading Securities Cost Fair Value

Horton, Inc. common (5,000 shares) 215,000 200,000

Monty, Inc. preferred (3,500 shares)133,000 140,000

Oakwood Corp. common (1,000 shares)180,000 179,000

On October 10, 2010, the Horton shares were sold at a price of $54 per share. In addition, 3,000 shares of Patriot common stock were acquired at $54.50 per share on November 2, 2010. The December 31, 2010, fair values were: Monty $106,000, Patriot $132,000, and the Oakwood common $193,000. All the securi- ties are classified as trading.

Instructions

Prepare the journal entries to record the sale, purchase, and adjusting entries related to the trading securities in the last quarter of 2010. How would the entries in part (a) change if the securities were classified as available-for-sale?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9435901

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