Deal Company, which began operations in 2011, invests its idle cash in trading securities. The following transactions relate to its short term investments in its trading securities.
2011
Mar. 10 Purchased 1,200 shares of AOL at $59.15 per share plus a $773 commission.
May 7 Purchased 2,500 shares of MTV at $36.25 per share plus a $1,428 commission.
Sept. 1 Purchased 600 shares of UPS at $57.25 per share plus a $625 commission.
2012
Apr. 26 Sold 2,500 shares of MTV at $34.50 per share less a $1,025 commission.
Apr. 27 Sold 600 shares of UPS at $60.50 per share less an $894 commission.
June 2 Purchased 1,800 shares of SPW at $172 per share plus a $1,625 commission.
June 14 Purchased 450 shares of Walmart at $50.25 per share plus a $541.50 commission.
2013
Jan. 28 Purchased 1,000 shares of PepsiCo at $43 per share plus a $1,445 commission.
Jan. 31 Sold 1,800 shares of SPW at $168 per share less a $1,020 commission.
Aug. 22 Sold 1,200 shares of AOL at $56.75 per share less a $1,240 commission.
Sept. 3 Purchased 750 shares of Vodaphone at $40.50 per share plus an $840 commission.
Oct. 9 Sold 450 shares of Walmart at $53.75 per share less a $610.50 commission.
Required
1. Prepare journal entries to record these short term investment activities for the years shown. (Ignore any year end adjusting entries.)
2. On December 31, 2013, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities when PepsiCo’s share price is $41 and Vodaphone’s share price is $37. (Assume the Fair Value Adjustment—Trading account had an unadjusted balance of zero.)