Accounting for Marketable Equity Securities
Trans America Trust Co. owns both trading and available for sale securities. The following securities were owned on December 31, 2007:
Trading Securities:
|
|
|
Total |
Market Value, |
Market |
|
Security |
Shares |
Cost |
Dec 31, 2007 |
Adjustment |
|
Albert Groceries, Inc. |
600 |
$ 9,000 |
$11,500 |
$2,500 Dr. |
|
West Data, Inc. |
1,000 |
27,000 |
18,000 |
9,000 Cr |
|
Steel Co |
450 |
9,900 |
10,215 |
315 Dr. |
|
Total |
|
$45,900 |
$39,715 |
$6,185 Cr |
Available for Sale Securities:
|
|
|
Total |
Market Value, |
Market |
|
Security |
Shares |
Cost |
Dec 31, 2007 |
Adjustment |
|
Dairy Products |
2,000 |
$ 86,000 |
$ 90,000 |
$ 4,000 Dr. |
|
Vern Movies, Inc. |
15,000 |
390,000 |
365,000 |
25,000 Cr |
|
Disks, Inc. |
5,000 |
60,000 |
80,000 |
20,000 Dr. |
|
Total |
|
$536,000 |
$535,000 |
$ 1,000 Cr |
The following transactions occurred during 2008:
(a) Sold 500 shares of West Data, Inc., for $9,500.
(b) Sold 200 shares of Disks, Inc., for $3,000.
(c) Transferred all shares of Albert Groceries, Inc., to the available for sale portfolio when the total market value was $12,900.
(d) Transferred the remaining shares of Disks, Inc., to the trading securities portfolio when the market price was $20 per share. These shares were subsequently sold for $18 per share. At December 31, 2008, market prices for the remaining securities were as follows:
|
Security |
Market Price per Share |
|
Albert Groceries, Inc. |
$22 |
|
West Data, Inc. |
15 |
|
Steel Co |
21 |
|
Dairy Products |
42 |
|
Vern Movies, Inc. |
28 |
Instructions: Prepare all journal entries necessary to record Trans America Trust Co.’s marketable equity securities transactions and year end adjustments for 2008. Assume that all declines in market value are temporary.