While reviewing the March 31, 2014, balance sheet of Success
Systems, Adria Lopez notes that the business has built a large cash balance of
$77,845. Its most recent bank money market statement shows that the funds are
earning an annualized return of 0.75%. Adria Lopez decides to make several
investments with the desire to earn a higher return on the idle cash balance.
Accordingly, in April 2014, Success Systems makes the following investments in
April 16 Purchases 400 shares of Johnson and Johnson stock at
$50 per share plus $300 commission
April 30 Purchases 200 shares of Starbucks Corporation at $22
per share plus $250 commission
On June 30, 2014, the per share market price (fair value) of the
Johnson & Johnson shares is $55 and the Starbucks shares is $19.
entries to record the April purchases of trading securities by Success Systems.2. On June 30, 2014, prepare
the adjusting entry to record any necessary fair value adjustment to its
portfolio of trading securities.Problem 2 – Investments
Journal Entries for Stock Acquisitions
Fair Value Adjustment Entry
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