Answer to Question #287599 in Accounting for Hase

Question

1, On January 1, year 2, Investor Company made long term investments of 400,000 in the common stock of several publicly owned corporations. The aggregate market value of the investments was 360,000 at the end of year 2 and 384, 000 at the end of year 3. On October 20, year 4 Investor Company sold long term investment that cost 200,000 for 150,000 and the aggregate market value of the remaining investments (costs 200,000) was 190,000.

Required

A, Present the Journal entries to record the above transactions and information.

B, Determine the balance of (i) the investment, (ii) the allowance, and (iii) the unrealized loss account at the end of year 2, year 3 and year 4.

C, Show how the investment in marketable equity securities and the unrealized loss are presented in the balance sheets of investor Company at the end of year 2, year 3, and year 4.

Answer 1

1.

A.

Debit Financial investments Credit Settlements with various debtors and creditors - 400 000

Debit account unrealized losses credit financial investments - 40 000

Debit financial investments credit account unrealized losses - 24 000

Debit settlements with various debtors and creditors Credit Other income - 150 000

Debit account unrealized losses credit financial investments - 44 000

B.С