Reference no: EM131840247
Problem 1 - The following information is available from the financial statements of Wright Industries. Compute Wright's return on total assets for 2011 and 2012. (Round returns to one-tenth of a percent). Comment on the company's efficiency in using its assets in 2011 and 2012.
2010 2011 2012
Total assets,Dec.31 $190,000 $320,000 $750,000
Net income 28,200 36,400 58,300
Problem 2 - Ryder Company, which began operations in 2011, invests its idle cash in trading securities. The following transactions are from its short-term investments in its trading securities.
2011
Jan.20 Purchased 900 shares of Ford Motor Co. at $36 per share plus a $125 commission.
Feb.9 Purchased 4,400 shares of Lucent at $10 per share plus a $200 commission.
Oct.12 Purchased 500 shares of Z-Seven at $8 per share plus a $100 commission.
2012
Apr. 15 Sold 900 shares of Ford Motor Co. at $39 per share less a $185 commission.
July 5 Sold 500 shares of Z-Seven at $10.25 per share less a $100 commission.
July 22 Purchased 800 shares of Hunt Corp. at $30 per share plus a $225 commission.
Aug,19 Purchased 1,000 shares of Donna Karan at $12 per share plus a $100 commission.
2013
Feb.27 Purchased 3,400 shares of HCA at $22 per share plus a $220 commission.
Mar.3 Sold 800 shares of Hunt at $25 per share less a $125 commission
June21 Sold 4,400 shares of Lucent at $8 per share less a $180 commission
June 30 Purchased 1,000 shares of Black&Decker at $47.50 per share plus a $195 commission.
Nov.1 Sold 1,000 shares of Donna Karan at $22 per share less a $208 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 HCA's share price is $24 and Black & Decker's share price is $43.50 ( Assume the Fair Value Adjustment-Trading account had an unadjusted balance of zero)