Exercise 12-8 Requirement 1 2006 December 17 Investment in Grocers’ Supply preferred shares 350,000 Cash 350,000 December 28 Cash 2,000 Investment revenue 2,000 December 31 Investment in Grocers’ Supply preferred shares 50,000 Unrealized holding gain 50,000 ([$4 x 100,000 shares] - $350,000) 2007 January 5 Cash 395,000 (selling price) Loss on investments 5,000 (to balance) Investment in Grocers’ Supply preferred shares 400,000 (account balance) Requirement 2 Balance Sheet (short-term investment): Trading securities $400,000 Income Statement: Investment revenue $ 2,000 (dividends) Unrealized holding gain 50,000 (from adjusting entry) Note: Unlike for securities available-for-sale, unrealized holding gains and losses for trading securities are included in income.
Exercise 12-8 Requirement 1 2006 December 17 Investment in Grocers’ Supply preferred shares 350,000 Cash 350,000 December 28 Cash 2,000 Investment revenue 2,000 December 31 Investment in Grocers’ Supply preferred shares 50,000 Unrealized holding gain ([$4 x 100,000 shares] - $350,000) 50,000 2007 January 5 Cash (selling price) 395,000 Loss on investments (to balance) 5,000 Investment in Grocers’ Supply preferred shares (account balance) 400,000 Requirement 2 Balance Sheet (short-term investment): Trading securities $400,000 Income Statement: Investment revenue (dividends) $ 2,000 Unrealized holding gain (from adjusting entry) 50,000 Note: Unlike for securities available-for-sale, unrealized holding gains and losses for trading securities are included in income.
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