Reference no: EM132017837

Question 1 - Krogstad Corporation bought 1,000 shares of Cole Inc. for $90 per share plus a brokerage fee of $1,800. Three months later, 200 shares were sold for $110 per share. The brokerage fee on the sale was $2,200. The investment is classified as trading security.

Required:

(1) Prepare the appropriate journal entry to record the purchase of the stock.

(2) Prepare the appropriate journal entry to record the sale of the stock.

Question 2 - During 2011, Largent Enterprises purchased stock as follows:

May 17, Purchased 1,000 shares of Nugent common stock for $80 per share.

July 12, Purchased 400 shares of Alfredo common stock at $60 per share, plus a $600 brokerage commission.

Largent accounts for these investments as securities available for sale. At December 31, 2011, the market values of the securities were as follows:

Required:

(1) Prepare the journal entries to record the acquisition of the two investments. Prepare two separate entries.

(2) Prepare any necessary adjusting entries assuming the stocks are both classified as available for sale securities. Prepare two separate entries.