Journal Entries for Trading Securities
During 2008 and 2009, Kopson Co. made the following journal entries to account for transactions involving trading securities:
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2008 |
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(a) |
Nov |
1 |
Investment in Trading Securities—10% US Treasury Bonds |
106,883 |
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Cash |
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106,883 |
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To record the purchase of $100,000 of US Treasury |
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bonds at 10325 Brokerage fees were $300 Interest is |
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payable semiannually on January 1 and July 1 |
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(b) |
Dec 31 |
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Unrealized Increase/Decrease in Value of |
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Available for Sale Securities |
4,283 |
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Market Adjustment—Trading Securities |
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4,283 |
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To record the decrease in market value of the current |
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marketable securities based on the following data |
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Cost |
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Market |
Market Adjustment |
|
Fleming Co stock |
$ 25,250 |
$ 23,350 |
$1,900 Cr |
|
Dobson Co stock |
32,450 |
33,950 |
1,500 Dr. |
|
10% US Treasury bonds |
106,883 |
103,000 |
3,883 Cr |
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Total |
$164,583 |
$160,300 |
$4,283 Cr |
The beginning balance in Market Adjustment—Trading Securities was a $500 credit. There were no other entries in 2008.
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2009 |
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(c) |
Jan |
1 |
Cash |
5,000 |
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Interest Revenue |
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5,000 |
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To record interest revenue for 6 months |
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(d) July |
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1 |
Cash |
5,000 |
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Interest Revenue |
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5,000 |
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To record interest revenue for 6 months |
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(e) |
Dec |
6 |
Investment in Available for Sale Securities—Fleming Co |
25,250 |
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Investment in Trading Securities—Fleming Co |
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25,250 |
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To reclassify Fleming Co stock from trading securities |
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to available for sale securities Market price was $24,500 |
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at the date of reclassification |
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(f) |
Dec 31 |
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Unrealized Increase/Decrease in Value of Available for |
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Sale Securities |
3,483 |
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Market Adjustment—Available for Sale Securities |
|
300 |
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Market Adjustment—Trading Securities |
|
3,183 |
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To record the decrease in market value of available for |
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sale securities based on the following data |
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Cost |
Market |
Market Adjustment |
|
Dobson Co stock |
$ 32,450 |
$ 32,650 |
$ 200 Dr. |
|
10% US Treasury bonds |
106,883 |
103,500 |
3,383 Cr |
|
Fleming Co stock |
25,250 |
24,950 |
300 Cr |
|
Total |
$164,583 |
$161,100 |
$3,483 Cr |
There were no other entries in 2009.
Instructions: For each incorrect entry, give the entry that should have been made. Assume the revenue approach is used. Ignore any premium or discount amortization on U.S. Treasury bonds.