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Prepare journal entries to record the short-term investment

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Question: 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. June 21 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.)

Reference no: EM131534961

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