Reference no: EM132586548
Supporting records of ABC CORP's trading securities portfolio show the following debt and equity securities:
Security Cost Fair Value
400 ordinary shares Con Co. P254,500 P243,000
P800,000 Tip Co. 7% bonds P796,500 P774,000
P1,200,000 Turk Co. 7.5% bonds P1,207,500 P1,218,900
Totals P2,258,500 P2,235,900
Interest dates on the bonds are January 1 and July 1. ABC Corp uses the income approach to record the purchase of bonds with accrued interest. During 2017 and 2018. ABC completed the following transactions related to trading securities:
2017
January 1 received semiannual interest on bonds. Assume that the appropriate adjusting entry was made on December 31, 2016
April 1 Sold P600,000 of 7.5% Turk bonds at 102 plus accrued interest.
May 21 Received dividend of P1.25 per share on the Con ordinary share capital. The dividend had not been recorded on the declaration date.
July 1 Received semiannual interest on bonds and then sold the 7% tip bonds at 97.5
Aug 25 Purchased 200 shares of New Inc. ordinary share capital at P580 per share plus brokerage fees of P500.
Nov 1 Purchased P500,000 of 8% Tol. Co bonds at 101 plus accrued interest. Brokerage fees were P1,250. Interest dates are January 1 and July 1.
Dec 31 Market securities were:
Con ordinary shares P550
7.5 Turk bonds at 101 ¾
8% Tol bonds 101
New ordinary shares P583.75
2018
Jan 2 Recorded the receipt of semiannual interest on bonds
Feb 1 Sold the remaining 7 ½ % Turk bonds at 101 plus accrued interest
Question 1: What amount should be reported as gain on sale of trading securities in 2017?
a. P6,000
b. P2,550
c. P3,450
d. P8,550
e. Answer not given
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