Problem 17-5
Parnevik Company has the followingsecurities in its investment portfolio on December 31, 2014 (allsecurities were purchased in 2014): (1) 3,130 shares of AndersonCo. common stock which cost $56,340, (2) 10,450 shares of MunterLtd. common stock which cost $595,650, and (3) 6,050 shares of KingCompany preferred stock which cost $248,050. The Fair ValueAdjustment account shows a credit of $10,190 at the end of2014.
In 2015, Parnevik completed the following securitiestransactions.
1.
On January 15, sold 3,130 shares of Anderson’s common stock at$22 per share less fees of $2,020.
2.
On April 17, purchased 1,470 shares of Castle’s common stock at$32 per share plus fees of $1,830.
On December 31, 2015, the market prices per share of thesesecurities were Munter $61, King $40, and Castle $23. In addition,the accounting supervisor of Parnevik told you that, even thoughall these securities have readily determinable fair values,Parnevik will not actively trade these securities because the topmanagement intends to hold them for more than one year.
(a) Prepare the entry for the security sale onJanuary 15, 2015. (Credit account titles areautomatically indented when amount is entered. Do not indentmanually. If no entry is required, select “No Entry” for theaccount titles and enter 0 for the amounts.)
Date
Account Titles andExplanation
Debit
Credit
Jan. 15, 2015
(b) Prepare the journal entry to record thesecurity purchase on April 17, 2015. (Credit accounttitles are automatically indented when amount is entered. Do notindent manually. If no entry is required, select “No Entry” for theaccount titles and enter 0 for the amounts.)
Date
Account Titles andExplanation
Debit
Credit
Apr. 17, 2015
(c) Compute the unrealized gains or losses.
UnrealizedGainLoss
$
Prepare the adjusting entry for Parnevik on December 31, 2015.(Credit account titles are automatically indented whenamount is entered. Do not indent manually. If no entry is required,select “No Entry” for the account titles and enter 0 for theamounts.)
Date
Account Titles andExplanation
Debit
Credit
Dec. 31, 2015
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