Accounting Chapter 15 Homework We can also use a T-account to determine the needed adjustment

895

Problem 15-1A (Concluded)

2019

Feb. 27

Short-Term Investments—Trading (HCA) …………….

116,020

Mar. 3

Cash …………………………………………………………….

39,750

June 21

Cash …………………………………………………………….

91,980

Loss on Sale of Short-Term Investments ………

June 30

57,595

Nov. 1

Cash …………………………………………………………….

32,541

Dec. 31

Fair Value Adjustment—Trading (ST)…………….

25,897

We can also use a T-account to determine the needed adjustment to fair value:

12/31/2019—F.V. Adj—Trading

Adj.

End.

896

Problem 15-2A (40 minutes)

Part 1

2017

Apr. 16

Short-Term Investments—AFS (Gem) …………………….

97,180

Aug. 1

Cash …………………………………………………………………….

101,500

100,000

Cash ……………………………………………………………….

Short-Term Investments—AFS (T-bills) …………………..

100,000

Short-Term Investments—AFS (Pepsi) ……………………

Short-Term Investments—AFS (Xerox) ……………………

897

Problem 15-2A (Continued)

Part 2

Comparison of Cost and Fair Values for AFS Portfolio

Unrealized

Cost Fair Value Gain (Loss)

Gem Co. (2,000 x $24.25) + 90a …………… $ 48,590

Part 3

Part 4

The balance sheet would report the cost of these short-term investments in

Part 5

(a) Income statement

898

Problem 15-3A (60 minutes)

Part 1

2017

Problem 15-3A (Continued)

2018

Apr. 15

Cash ………………………………………………………………………………

22,975

Cash ………………………………………………………………………………

35,615

July 22

Long-Term Investments—AFS (Sara Lee) …………………………..

13,980

Aug. 19

Long-Term Investments—AFS (Eastman Kodak) …………………..

15,498

Dec. 31

Unrealized Loss⎯Equity ………………………………………………..

10,168

900

Problem 15-3A (Continued)

2019

Feb. 27

Long-Term Investments—AFS (Microsoft) …………………………..

161,325

Aug. 3

Cash ……………………………………………………………………………..

9,315

Loss on Sale of Investments …………………………..

4,665

Nov. 1

Cash ……………………………………………………………………………..

Dec. 31

Fair Value Adjustment—AFS (LT)* …………………………..

Cash ……………………………………………………………………………..

1,055

Long-Term Investments—AFS (Black & Decker) ……………………

901

Problem 15-3A (Concluded)

Part 2

12/31/2017

12/31/2018

12/31/2019

Part 3

2017

2018

2019

Realized gains (losses)

Total realized gain (loss) ………………………

902

Problem 15-4A (30 minutes)

Part 1

1. Journal entries (assuming significant influence)

2017

2018

2019

903

Problem 15-4A (Continued)

2. Carrying value per share, January 1, 2019 (see computations in part 1)

Part 2

1. Journal entries (assuming NO significant influence)

2017

904

Problem 15-4A (Concluded)

2019

2. Investment cost per share, January 1, 2019

3. Change in Selk’s equity due to stock investment

Problem 15-5A (40 minutes)

Part 1

Available–for-sale securities on December 31, 2017

Security

Cost

Fair Value

270,350

Disclosure

Part 2

Part 3

Year 2017 realized gains (losses)

Stock Sold

Cost

Sale

Gain (Loss)

906

PROBLEM SET B

Problem 15-1B (60 minutes)

Part 1

2017

Mar. 10

Short-Term Investments—Trading (AOL) ……………….

143,505

May 7

184,105

Problem 15-1B (Continued)

2018

Apr. 26

Loss on Sale of Short-Term Investments ………..

Apr. 27

Dec. 31

Fair Value Adjustment—Trading (ST) ……………..

33,298

Adj.

End.

908

Problem 15-1B (Concluded)

909

Problem 15-2B (40 minutes)

Part 1

Feb. 6

Short-Term Investments—AFS (Nokia)…………

143,250

Short-Term Investments—AFS (Merck) ………..

184,140

Short-Term Investments—AFS (T-bills) ………..

Short-Term Investments—AFS (Dell) …………..

Problem 15-2B (Concluded)

Part 2

Comparison of Cost and Fair Values of AFS Portfolio

Unrealized

Cost Fair Value Gain (Loss)

Part 3

Part 4

The balance sheet would report the cost of these short-term investments in

Part 5

(a) Income statement

(b) Equity section of Balance sheet

911

Problem 15-3B (60 minutes)

Part 1

2017