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Make journal entries to record the short-term investment

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Question: Deal Company, which began operations in 2011, invests its idle cash in trading securities. The following transactions relate to its short-term investments in its trading securities. 2011 Mar. 10 Purchased 1,200 shares of AOL at $59.15 per share plus a $773 commission. May 7 Purchased 2,500 shares of MTV at $36.25 per share plus a $1,428 commission. Sept. 1 Purchased 600 shares of UPS at $57.25 per share plus a $625 commission. 2012 Apr. 26 Sold 2,500 shares of MTV at $34.50 per share less a $1,025 commission. Apr. 27 Sold 600 shares of UPS at $60.50 per share less an $894 commission. June 2 Purchased 1,800 shares of SPW at $172 per share plus a $1,625 commission. June 14 Purchased 450 shares of Walmart at $50.25 per share plus a $541.50 commission. 2013 Jan. 28 Purchased 1,000 shares of PepsiCo at $43 per share plus a $1,445 commission. Jan. 31 Sold 1,800 shares of SPW at $168 per share less a $1,020 commission. Aug. 22 Sold 1,200 shares of AOL at $56.75 per share less a $1,240 commission. Sept. 3 Purchased 750 shares of Vodaphone at $40.50 per share plus an $840 commission. Oct. 9 Sold 450 shares of Walmart at $53.75 per share less a $610.50 commission.

Required: 1. Prepare journal entries to record these short-term investment activities for the years shown. (Ignore any year-end adjusting entries.)

2. On December 31, 2013, prepare the adjusting entry to record any necessary fair value adjustment for the portfolio of trading securities when PepsiCo's share price is $41 and Vodaphone's share price is $37. (Assume the Fair Value Adjustment-Trading account had an unadjusted balance of zero.)

Reference no: EM131535029

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