[Jrykhoek]

American Surety and Fidelity buys and sells securities expecting to earn profits on short-term differences in price. For the first 11 months of 2013, gains from selling trading securities totaled $7 million, losses were $11 million, and the company had earned $5 million in investment revenue. The following selected transactions relate to American’s trading account during December 2013, and the first week of 2014. The company’s fiscal year ends on December 31. No trading securities were held by American on December 1, 2013.

2013
Dec. 12
Purchased FF&G Corporation bonds for $16 million.

13
Purchased 2 million Ferry Intercommunications common shares for $26 million.

15
Sold the FF&G Corporation bonds for $16.4 million.

22
Purchased U.S. Treasury bills for $56 million and Treasury bonds for $69 million.

23
Sold half the Ferry Intercommunications common shares for $12 million.

26
Sold the U.S. Treasury bills for $60 million.

27
Sold the Treasury bonds for $65 million.

28
Received cash dividends of $200,000 from the Ferry Intercommunications common shares.

31
Recorded any necessary adjusting entry(s) and closing entries relating to the investments.
The market price of the Ferry Intercommunications stock was $10 per share.

2014
Jan. 2
Sold the remaining Ferry Intercommunications common shares for $12.4 million.

5
Purchased Warehouse Designs Corporation bonds for $38 million.


I need help with the adjusting entry at 12/31 and the closing entry... I can't figure out how the unrealized loss isn't 3 million. Please help!

[paraclete]

$3million would appear to be the unrealised loss on Ferry at balance date $13 million acquisition cost, $10million valuation however a subsequent transaction immediately after balance date should be taken into account as to fail to do so would create a significant distortion in the accounts

[Jrykhoek]

When I entered 3 million the homework said that was an incorrect answer :/ all the information given in the problem is listed above. I completely agree with thinking it is 3! (which is why I resorted to this website)

[paraclete]

When I entered 3 million the homework said that was an incorrect answer :/ all the information given in the problem is listed above. I completely agree with thinking it is 3!! (which is why I resorted to this website)

Have you tried $600,000

[Jrykhoek]

[QUOTE=paraclete;3267181]Have you tried $600,000[/QUOTE

No I haven't, where'd you come up with that?

[paraclete]

The shares were sold on the next trading day for $12.4 million

[Jrykhoek]

the shares were sold on the next trading day for $12.4 million

I tried it, and its wrong :/

[paraclete]

I tried it, and its wrong :/

Well got me buddy good luck