Accounting for Trading Securities
During 2007, Sunbeam Inc. purchased the following trading securities:
|
|
|
Market Value, |
|
Security |
Cost |
Dec 31, 2007 |
|
Luthor Corp common |
$22,000 |
$25,000 |
|
10% US Treasury notes |
17,000 |
10,000 |
|
ChevCo bonds |
16,000 |
19,000 |
At the beginning of 2007, Sunbeam had a zero balance in Market Adjustment—Trading Securities.
1. What entry would be made at year end, assuming the preceding values?
2. What entry would be made during 2008, assuming one half of the Luthor Corp. common stock is sold for $13,000?
3. Give the entry that would be made at the end of 2008, assuming the following situations:
(a) The market value of remaining securities is $41,000.
(b) The market value of remaining securities is $43,500.
(c) The market value of remaining securities is $48,000.