Randy Corporation’s trading portfolio at the end of the year 1. Randy Corporation’s trading portfolio at the end of the year is as follows: Security Cost Fair Value Common Stock A $10,000 $12,000 Common Stock B 8,000 5,000 $18,000 $17,000 At the end of the year, Randy Corporation should a. set up a Fair Value Adjustment account for Stock B. b. set up a Fair Value Adjustment account for the portfolio. c. recognize an Unrealized Gain or Lossâ€”Income for $3,000. d. report a loss on the income statement for $3,000 under “Other expenses and losses.” 2. Randy Corporation’s trading portfolio at the end of the year is as follows: Security Cost Fair Value Common Stock A $10,000 $12,000 Common Stock B 9,000 5,000 $19,000 $17,000 Randy subsequently sells Stock B for $10,000. What entry is made to record the sale? a. Cash 10,000 Stock Investments 10,000 b. Cash 10,000 Market Adjustment 1,000 Stock Investments 9,000 c. Cash 10,000 Stock Investments 9,000 Gain on Sale of Stock Investments 1,000 d. Cash 10,000 Stock Investments 5,000 Gain on Sale of Stock Investments 5,000 3. Which of the following would not be reported under “Other Revenues and Gains” on the income statement? a. Unrealized gain on non-trading securities b. Dividend revenue c. Interest revenue d. Gain on sale of short-term debt investments 4. The balance in the Unrealized Lossâ€”Equity account will a. appear on the balance sheet as a contra asset. b. appear on the income statement under Other Expenses and Losses. c. appear as a deduction in the stockholders’ equity section. d. not be shown on the financial statements until the securities are sold. 5. If the cost of a non-trading security exceeds its fair value by $40,000, the entry to recognize the loss a. is not required since the share prices will likely rebound in the long run. b. will show a debit to an expense account. c. will show a credit to a contra-asset account that appears in the stockholders’ equity section of the balance sheet. d. will show a debit to an unrealized loss account that is deducted in the stockholders’ equity section of the balance sheet. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help
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