Reference no: EM132683748
Problem - Stock investment transactions, trading securities
Heritage Insurance Co. is a regional insurance company that began operations on January 1, 2012. The following transactions relate to trading securities acquired by Heritage Insurance Co., which has a fiscal year ending on December 31:
2012
Feb. 21. Purchased 4,000 shares of Astor Inc. as a trading security at $30 per share plus a brokerage commission of $600.
Mar. 9. Purchased 800 shares of Millsaps Inc. as a trading security at $41 per share plus a brokerage commission of $160.
May 3. Sold 600 shares of Astor Inc. for $27.50 per share less an $80 brokerage commission.
June 8. Received an annual dividend of $0.22 per share on Astor Inc. stock.
Dec. 31. The portfolio of trading securities was adjusted to fair values of $32 and $30 per share for Astor Inc. and Millsaps Inc., respectively.
2013
May 21. Purchased 2,000 shares of Essex Inc. as a trading security at $21 per share plus a $200 brokerage commission.
June 11. Received an annual dividend of $0.25 per share on Astor Inc. stock.
Aug. 16. Sold 400 shares of Essex Inc. for $25 per share less an $80 brokerage commission.
Dec. 31. The portfolio of trading securities had a cost of $169,230 and fair value of $170,560, requiring a debit balance in Valuation Allowance for Trading Investments of $1,330 ($170,560 $169,230). Thus, the credit balance from December 31, 2012, is to be adjusted to the new balance.
Instructions -
1. Journalize the entries to record these transactions.
2. Prepare the investment-related current asset balance sheet disclosures for Heritage Insurance Co. on December 31, 2013.
3. How are unrealized gains or losses on trading investments disclosed on the financial statements of Heritage Insurance Co.?
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