Title: Problem 15-1B
QA_Ori:
Part 1
2013
Mar. 10 Short-Term Investments—Trading (AOL) 143,505
May 7 Short-Term Investments—Trading (MTV) 184,105
Sept. 1 Short-Term Investments—Trading (UPS) 69,950
2014
Apr. 26 Cash 170,450
27 Cash 70,812
June 2 Short-Term Investments—Trading (SPW) 622,450
14 Short-Term Investments—Trading (W-M) 46,307
2015
Jan. 28 Short-Term Investments—Trading (Pepsi) 88,890
31 Cash 602,760
Aug. 22 Cash 133,720
Sept. 3 Short-Term Investments—Trading (Voda) 62,430
Oct. 9 Cash 47,155
Part 2 (Adjusting entry at December 31, 2015)
* Fair value adjustment computations
Trading
Securities’
Portfolio
Shares
Price at
12/31/15
Fair
Value Cost
Unrealized
Gain (Loss)
PepsiCo 2,000 $41.00 $ 82,000 $ 88,890 $ (6,890)
Title: Problem 15-2B
QA_Ori:
Part 1
Feb. 6 Short-Term Investments—AFS (Nokia) 143,250
Apr. 7 Short-Term Investments—AFS (Dell) 48,655
June 2 Short-Term Investments—AFS (Merck) 184,140
Aug. 11 Cash* 38,050
Gain on Sale of Short-Term Investments 2,237
16 Cash 20,600
Short-Term Investments—AFS (T-bills) 20,000
24 Cash 120
Nov. 9 Cash 510
Dec. 18 Cash 180
Part 2
Comparison of Cost and Fair Values of AFS Portfolio
Cost Fair Value
Unrealized
Gain (Loss)
Nokia (2,550 x $41.25) + $2,250a$107,437
a Brokerage fee attached to remaining 2,550 shares: $3,000 x (3,400 sh.– 850 sh.)/
Part 3
Dec. 31 Unrealized Loss—Equity 41,494
Part 4
The balance sheet would report the cost of these short-term investments in
available-for-sale securities at $340,232 and show a subtraction of $41,494 for the fair
Part 5
(a) Income statement
(i) Interest Revenue, $600
(b) Equity section of Balance sheet
Title: Problem 15-3B
QA_Ori:
Part 1
2013
Mar. 10 Long-Term Investments—AFS (Apple) 31,400
April 7 Long-Term Investments—AFS (Ford) 57,283
Sept. 1 Long-Term Investments—AFS (Polaroid) 29,090
Dec. 31 Unrealized Loss—Equity 2,873
Fair Value Adjustment—AFS (LT)* 2,873
Annual adjustment to fair values.
* Cost _ Fair
Value
Apple $ 31,400 $ 33,000
2014
Apr. 26 Cash 50,043
June 2 Long-Term Investments—AFS (Duracell) 35,700
Cash 35,700
June 14 Long-Term Investments—AFS (Sears) 25,480
Nov. 27 Cash 29,755
Gain on Sale of Investments 665
Dec. 31 Fair Value Adjustment—AFS (LT)* 5,093
* Cost _ Fair
Value
Apple $31,400 $34,800
$92,580 – $94,800 = $2,220
2015
Jan. 28 Long-Term Investments—AFS (Coca-Cola) 41,480
Aug. 22 Cash 23,950
Sept. 3 Long-Term Investments—AFS (Motorola) 84,780
Oct. 9 Cash 28,201
Oct. 31 Cash 26,102
Dec. 31 Unrealized GainEquity 2,220
* Cost _ Fair Value
Coca-Cola $ 41,480 $ 48,000
Motorola 84,780 72,000
Total $126,260 $120,000
Part 2
12/31/2013 12/31/2014 12/31/2015
Long-Term AFS Securities (cost) $117,773 $92,580 $126,260
Part 3
2013 2014 2015
Realized gains (losses)
Sale of Ford shares $(7,240)
Title: Problem 15-4B
QA_Ori:
Part 1
Available-for-sale securities on December 31, 2013
Security Cost Fair Value
27,500 shares of Company R common stock $559,125 $568,125
Disclosure
Part 2
Dec. 31 Unrealized LossEquity 16,267
Unrealized GainEquity 29,313
Fair Value Adjustment—AFS (LT)* 45,580
*December 31, 2012, available-for-sale securities:
Cost Fair Value
$ 559,125 $ 599,063
Part 3
Only gains or losses realized on the sale of available-for-sale securities appear on the
2013 income statement. Unrealized gains or losses appear in the equity section of the
balance sheet.
Year 2013 realized gain (loss)
Stock Sold Cost Sale Gain (Loss)
Title: Problem 15-5B
QA_Ori:
Part 1
1. Journal entries (assuming significant influence)
2013
Jan. 5 Long-Term Investments—Bloch 200,500
Cash 200,500
Purchased Bloch shares.
Aug. 1 Cash 21,000
Long-Term Investments—Bloch 21,000
Received cash dividend (20,000 x $1.05).
Sold Bloch shares.
*Investment carrying value at Jan. 7, 2015
Original cost $200,500
2. Carrying value per share (see computations in part 1)
3. Change in Brinkley’s equity
Earnings from Bloch-2013 $ 20,500
Part 2
1. Journal entries (assuming NO significant influence)
2013
Jan. 5 Long-Term Investments—AFS (Bloch) 200,500
Cash 200,500
Purchased Bloch shares.
Aug. 1 Cash 21,000
Dividend Revenue 21,000
Received cash dividend (20,000 x $1.05).
2014
Aug. 1 Cash 27,000
Dividend Revenue 27,000
Received cash dividends (20,000 x $1.35).
Dec. 31 Fair Value Adjustment—AFS (LT)* 35,000
Unrealized Gain—Equity 35,000
Record fair value adjustment.
2015
2. Investment cost per share, January 7, 2015
3. Change in Brinkley’s equity