Get Academic Help From
Professional Essay Writers
100% Plagiarism-Free Essays
At December 31, 2010, Westport Manufacturing Co. owned the following investments in the capi- tal stock of publicly owned companies (all classified as available-for-sale securities):
Lamb Computer, Inc. (1,000 shares: cost,
Current Market
Cost Value
|
$30 per share; market value, $50) . . . . . . . . . . . . . . . . . . . . . . . . . . . $30,000 $50,000 Dry Foods (5,000 shares: cost, $9
In 2011, Westport engaged in the following two transactions:
Apr. 6 Sold 100 shares of its investment in Lamb Computer at a price of $55 per share, less a brokerage commission of $20.
Apr. 20 Sold 2,500 shares of its Dry Foods stock at a price of $7 per share, less a brokerage commission of $20.
At December 31, 2011, the market values of these stocks were: Lamb Computer, $40 per share; Dry Foods, $7.
a. Illustrate the presentation of marketable securities and the unrealized holding gain or loss in Westport’s balance sheet at December 31, 2010. Include a caption indicating the section of the balance sheet in which each of these accounts appears.
b. Prepare journal entries to record the transactions on April 6 and April 20.
c. Prior to making a fair value adjustment at the end of 2011, determine the unadjusted balance in the Marketable Securities controlling account and the Unrealized Holding Gain (or Loss) on Investments account. (Assume that no unrealized gains or losses have been recognized since last year.)
d. Prepare a schedule showing the cost and market values of securities owned at the end of 2011. (Use the same format as the schedule illustrated above.)
e. Prepare the fair value adjusting entry required at December 31, 2011.
f. Illustrate the presentation of the marketable securities and unrealized holding gain (or loss) in the balance sheet at December 31, 2011. (Follow the same format as in part a.)
g. Illustrate the presentation of the net realized gains (or losses) in the 2011 income statement. Assume a multiple-step income statement and show the caption identifying the section in which this amount would appear.
h. Explain how both the realized and the unrealized gains and losses will affect the company’s 2011 income tax return.
We guarantee 100% privacy throughout and after your interaction with us. Your identity is kept private as well as any additional information you provide to us. Our work is also 100% guaranteed to have zero plagiarism as well as help you pass in whichever course you are undertakin
Email:
[email protected]
WHATSAPP:
+1 (573) 260-3076