Jets Bancorp Inc. purchased a portfolio of trading securities during 2014.

Jets Bancorp Inc. purchased a portfolio of trading securities during 2014. The cost and fair value of this portfolio on December 31, 2014, was as follows:



Name Number of Shares Total Cost Total Fair Value
Dolphins Inc. 1,400 $28,000 $30,800
Marino Company 1,200 30,000 27,600
Namath Company 800 28,000 26,400
Total $86,000 $84,800



On May 10, 2015, Jets Bancorp Inc. purchased 1,000 shares of Giants Inc. at $24 per share plus a $150 brokerage fee.

Provide the journal entries to record the following:

a. The adjustment of the trading security portfolio to fair value on December 31, 2014.

b. The May 10, 2015, purchase of Giants Inc. stock.


Answer:

2014
a. Dec. 31 Unrealized Loss on Trading Investments 1,200
Valuation Allowance for Trading
Investments 1,200
To record decrease in fair value
of trading investments, $84,800 –
$86,000.
2015
b. May 10 Investments—Giants, Inc.* 24,150
Cash 24,150
*(1,000 shares × $24 per share) + $150