Question.3106 - You have just joined a CPA firm. Your manager is impressed with the recommendations that you provided on the reporting of securities for the client. He comes in and says “You did a great job! The client was thrilled with the recommendations.” Your manager has another consulting assignment. He asked you to prepare for him the entries and financial statement presentation for both of the following situations: ? The new client has the following securities on his or her books on Dec 31, 2011: Available-for-sale securities Cost Fair Value 2,000 shares of ABC stock $30,000 $35,000 1,000 shares of XYZ stock $20,000 $18,000 Total $50,000 $53,000o Prepare the adjusting entry required for 2010 under available-for-sale securities. o How are the amounts reported in the financial statements? ? The client has the following portfolio for trading securities as of Dec 31, 2011: Available for trading securities Cost Fair Value 4,000 shares of ABC stock $40,000 $35,000 2,000 shares of XYZ stock $30,000 $20,000 Total $70,000 $55,000o Prepare the adjusting entry required for 2010 under trading securities. o How are the amounts reported in the financial statements?
Answer Below:
The xxx client xxx the xxxxxxxxx securities xx his xx her xxxxx on xxx Available-for-sale xxxxxxxxxx Cost xxxx Value xxxxxx of xxx stock xxxxxx of xxx stock xxxxx o xxxxxxx the xxxxxxxxx entry xxxxxxxx for xxxxx available-for-sale xxxxxxxxxx o xxx are xxx amounts xxxxxxxx in xxx financial xxxxxxxxxx Solution xxxxxxxxx entries xx Investment xx ABC xx Fair xxxxx gain xx investments xx Investment xx Cole xxx Financial xxxxxxxxx adjustment xxx gain xxxx straight xx equity xxxxxxx going xxxxxxx the xxxxxx statement xxx client xxx the xxxxxxxxx portfolio xxx trading xxxxxxxxxx as xx Dec xxxxxxxxx for xxxxxxx securities xxxx Fair xxxxx shares xx ABC xxxxx shares xx XYZ xxxxx Total x Prepare xxx adjusting xxxxx required xxx under xxxxxxx securities x How xxx the xxxxxxx reported xx the xxxxxxxxx statements xxxxxxxx Dr xxxx on xxxxxxx investments xxxx to xxxxxx statement xx Investment xx ABC xx Investment xx XYZ xxxxxxxxx statement xxxxxxxxxx The xxxxxx statement xxxxx less xxx income xxx this xxxx will xxxx its xxx to xxxxxx via xxx retained xxxxxxxxMore Articles From Accounting
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