12–21 Solutions
+2,700
OCInc →
AOCInc
To revalue Security T to market value.
Solutions 12–22
12.16 continued.
2/15/2010
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+14,900
+2,900
IncSt → RE
–15,200
–3,200
OCInc →
AOCInc
To record sale of Security S.
8/22/2010
Cash ……………………………………………………………………. 28,500
Assets
=
Liabilities
+
Shareholders’
Equity
(Class.)
+28,500
–500
IncSt → RE
–31,700
–2,700
OCInc →
AOCInc
To record sale of Security T.
12.17 (Fischer/Black Co.; working backwards from data on marketable securities
transaction.)
b. $18,000, the amount credited to Marketable Securities in the journal entry
12–23 Solutions
Solutions 12–24
12.18 (Canning/Werther; working backwards from data on marketable securities
transaction.)
12.19 (Reconstructing events from journal entries.)
a. The fair value of a marketable security classified as available for sale is
b. A firm sells marketable securities classified as either trading securities or
c. The fair value of marketable securities classified as available for sale is
d. A firm sells marketable securities classified as either trading securities or
12.20 (Zeff Corporation; reconstructing transactions involving short-term securities
a. Sale of marketable securities during 2008: Proceeds of $14,000; gain on
b. Carrying value at time of sale was $13,000, so unrealized holding gain at
c. The ending balance of Net Unrealized holding Gains was $2,000 less at
12–25 Solutions
the securities sold was $3,000. The sale reduced the balance by $3,000.
Solutions 12–26
12.20 continued.
d. The Marketable Securities account increased by $8,000 = $195,000 –
12.21 (Turner Corporation; accounting for forward foreign exchange contract as a
fair value hedge.)
a. The amount that Turner Corporation would receive if the contract were
b. Turner Corporation would also report a commitment to purchase the
c. The fair value of the foreign exchange contract on June 30, 2009 just
d. June 30, 2009
Equipment ……………………………………………………….. 50,980
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+50,980
–3,757
–54,737
e. June 30, 2009
Cash ……………………………………………………………….. 3,757
12–27 Solutions
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+3,757
–3,757
Solutions 12–28
12.22 (Biddle Corporation; accounting for forward foreign exchange contract as a
cash flow hedge.)
a. The amount that Biddle Corporation would receive if the contract were
c. The fair value of the foreign exchange contract on March 31, 2009 just
d. March 31, 2009
Note Payable ……………………………………………………. 56,000
Cash ……………………………………………………………. 56,000
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
–56,000
–56,000
e. March 31, 2009
Cash ……………………………………………………………….. 3,200
Forward Foreign Exchange Contract ……………….. 3,200
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+3,200
–3,200
The carrying value of the equipment before recognizing any depreciation
12–29 Solutions
12.23 (Dostal Corporation; journal entries and financial statement presentation of
short-term securities available for sale.)
a. 2/05/2008
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+60,000
–60,000
8/12/2008
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+25,000
–25,000
12/31/2008
Marketable Securities (Security A) (= $66,000 –
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+6,000
+6,000
OCInc →
AOCInc
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
–5,000
–5,000
OCInc →
AOCInc
Solutions 12–30
12.23 a. continued.
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+82,000
–82,000
2/25/2009
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+42,000
–42,000
3/25/2009
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+75,000
–75,000
6/05/2009
Cash ……………………………………………………………….. 72,000
Unrealized Holding Gain on Security A Available
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+72,000
+12,000
IncSt → RE
–66,000
–6,000
OCInc →
AOCInc
12–31 Solutions
12.23 a. continued.
6/05/2009
Cash ……………………………………………………………….. 39,000
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+39,000
–3,000
IncSt → RE
–42,000
12/31/2009
Unrealized Holding Loss on Security C Available
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
–3,000
–3,000
OCInc →
AOCInc
12/31/2009
Marketable Securities (Security E) (= $80,000 –
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+5,000
+5,000
OCInc →
AOCInc
b. Balance Sheet on December 31, 2008
Marketable Securities at Fair Value ………………………………… $ 86,000
Note
Solutions 12–32
12–33 Solutions
12.23 continued.
c. Balance Sheet on December 31, 2009
Note
Marketable Securities on December 31, 2009 had an acquisition cost of
$182,000 and a fair value of $179,000. Gross unrealized gains total
12.24 (Rice Corporation; journal entries and financial statement presentation of long–
term securities available for sale.)
a. 3/05/2008
Investments in Securities (Security A) ………………….. 40,000
Cash ……………………………………………………………. 40,000
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+40,000
–40,000
5/12/2008
Investments in Securities (Security B) ………………….. 80,000
Cash ……………………………………………………………. 80,000
Solutions 12–34
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+80,000
–80,000
12–35 Solutions
12.24 a. continued.
12/31/2008
Investments in Securities (Security A) (= $45,000
Unrealized Holding Gain on Security A Avail–
able for Sale (Other Comprehensive
Income) ………………………………………………… 5,000
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+5,000
+5,000
OCInc →
AOCInc
12/31/2008
Unrealized Holding Loss on Security B Available
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
–10,000
–10,000
OCInc →
AOCInc
3/22/2009
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+32,000
–32,000
5/25/2009
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+17,000
–17,000
Solutions 12–36
12.24 a. continued.
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+63,000
–63,000
10/05/2009
Unrealized Holding Gain on Security A Available
Investments in Securities (Security A) …………… 45,000
Realized Gain on Sale of Securities Available
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+52,000
+12,000
IncSt → RE
–45,000
–5,000
OCInc →
AOCInc
10/05/2009
Cash ……………………………………………………………….. 16,000
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+16,000
–1,000
IncSt → RE
–17,000
12–37 Solutions
12.24 a. continued.
12/31/2009
Investments in Securities (Security B) (= $83,000
Unrealized Holding Loss on Security B Avail–
able for Sale (Other Comprehensive
Unrealized Holding Gain on Security B Avail–
able for Sale (Other Comprehensive
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+13,000
+10,000
OCInc →
AOCInc
+3,000
OCInc →
AOCInc
12/31/2009
Unrealized Holding Loss on Security C Available
for Sale (Other Comprehensive Income)
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
–5,000
–5,000
OCInc →
AOCInc
12/31/2009
Investments in Securities (Security E) (= $67,000
Assets
Liabilities
+
Shareholders’
Equity
(Class.)
+4,000
+4,000
OCInc →
AOCInc
b. Balance Sheet on December 31, 2008
Solutions 12–38
12–39 Solutions
12.24 b. continued.
Note
c. Balance Sheet on December 31, 2009
Investments in Securities at Fair Value ……………………………. $ 177,000
Note
Investments in Securities on December 31, 2009 had an acquisition cost
of $175,000 and a fair value of $177,000. Gross unrealized gains total
Balance, December 31, 2008 …………………………………….. $ (5,000) Dr.
12.25 (Moonshine Mining Company; analysis of financial statement disclosures for
securities available for sale.) (Amounts in Thousands)
a. $10,267 loss = $11,418 – $21,685.
Solutions 12–40
12.26 (Callahan Corporation; effect of various methods of accounting for marketable
equity securities.)
a. Trading Securities
2008 2009
Income Statement:
Dividend Revenue …………………………………….. $ 3,300 $ 2,200
Unrealized Holding Gain (Loss):
b. Securities Available for Sale (Current Asset)
2008 2009
Income Statement:
Dividend Revenue …………………………………….. $ 3,300 $ 2,200
Balance Sheet:
Current Assets:
Shareholders’ Equity:
Net Unrealized Holding Gain (Loss) on Se–
curities Available for Sale (Part of Accu-
mulated Other Comprehensive Income):
c. Same as Part
b.
except that the securities appear as Investments in