Reference no: EM132560164

Final Company has the following investments in its investment portfolio on December 31, 2017 (all investments were purchased in 2017):

(1) 3,000 ordinary shares of Anderson Company which cost $58,500,

(2) 10,000 ordinary shares of Munter Company which cost $580,000, and

(3) 6,000 preference shares of King Company which cost $255,000.

The Fair Value Adjustment account shows a credit balance of $10,100 at the end of 2017.

In 2018, Final Company completed the following investment transactions.

a. On January 15, sold 3,000 ordinary shares of Anderson Company at $22 per share less fees of $2,150.

b. On April 17, purchased 1,000 ordinary shares of Castle Company at $33.50 per share plus fees of $1,980.

On December 31, 2018, the fair values per share of these investments were: Munter $61, King $40, and Castle $29. Final company classifies these investments as trading.

Question 1. Prepare the entry for the sale on January 15, 2018.

Question 2. Prepare the journal entry to record the purchase on April 17, 2018.

Question 3. Compute the unrealized gains or losses and prepare the adjusting entry on December 31, 2018.

Question 4. How should the unrealized gains or losses be reported on Final Company's financial statements.

Question 5. Assuming the investment in King Company preference shares is classified as non-trading, briefly describe the accounting and reporting of this investment.