Chapter 13: 11P (page 658)
Question: (Equity Securities—Statement Presentation) Fernandez Corp. invested its excess cash in securities during2017. As of December 31, 2017, the securities portfolio consisted of the following common stocks.
Security Quantity Cost Fair Value
Lindsay Jones, Inc. 1,000 shares
Poley Corp. 2,000 shares 40,000 42,000
Arnold Aircraft 2,000 shares 72,000 60,000
Totals
Instructions
(a) What should be reported on Fernandez’s December 31, 2017, balance sheet relative to these securities? What should bereported on Fernandez’s 2017 income statement?
On December 31, 2018, Fernandez’s securities portfolio consisted of the following common stocks.
Security Quantity Cost Fair Value
Lindsay Jones, Inc. 1,000 shares
Lindsay Jones, Inc. 2,000 shares 33,000 40,000
Duff Company 1,000 shares 16,000 12,000
Arnold Aircraft 2,000 shares 72,000 22,000
Totals
During the year 2018, Fernandez Corp. sold 2,000 shares of Poley Corp. for \(38,200 and purchased 2,000 more shares of
Lindsay Jones, Inc. and 1,000 shares of Duff Company.
(b) What should be reported on Fernandez’s December 31, 2018, balance sheet? What should be reported on Fernandez’s2018 income statement?
On December 31, 2019, Fernandez’s securities portfolio consisted of the following common stocks.
Security Quantity Cost Fair Value
Arnold Aircraft 2,000 shares \)72,000 \(82,000
Duff Company 500 shares 8,000 6,000
Totals \)80,000 \(88,000
During the year 2019, Fernandez Corp. sold 3,000 shares of Lindsay Jones, Inc. for \)39,900 and 500 shares of Duff Companyat a loss of $2,700.
(c) What should be reported on the face of Fernandez’s December 31, 2019, balance sheet? What should be reported onFernandez’s 2019 income statement?
Short Answer
Answer:
Unrealized holding loss for the year 2019 is $46,000.
Step by step solution
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