Reference no: EM132744601

Yellow Inc. holds the following portfolio of securities held for trading purposes and accounted for using the fair value through net income model at September 30, 2011, the end of Yellow's third quarter. Yellow Inc. prepares adjusting entries and financial statements at the end of each quarter.

                                                         Investment Cost ($)               Fair Value ($)

1,000 common shares of Blue Inc.         180,000                        176,000
5,000 common shares of Red Inc.          225,000                       196,000
3,500 common shares of Orange Inc.     133,000                        140,000

• On November 30, 2011, Yellow sold all Red Inc. shares for $57 per share and purchased 3,000 shares of Green Inc. for $59.50 per share. Yellow pays a 1% commission on all purchase and sale share transactions. On December 31, 2011, the fair values of the shares held were as follows: Blue Inc. $193,000; Orange Inc. $96,000; Green Inc. $132,000.

Required:

Problem 1: Prepare the journal entries to record the purchases, sales and quarter-end adjustments in Yellow's investment portfolio for the fourth quarter of 2011.