On October 1 2013 Beta Corporation purchased 100 shares of O

On October 1, 2013 Beta Corporation purchased 100 shares of Oracle Corporation Capital Stock for $30 per share. Beta classified this investment as Available for Sale securities. At December 31, 2013, the price of Oracle had fallen to $22 per share. On February 28, 2014, Beta reclassified this investment to Trading Securities. The price of Oracle of February this investment to Trading Securities. The price of Oracle on February 28, 2014 was $25 per share. Required: Record the transactions related to this investment.

Solution

Date Account Title Dr $ Cr $ Oct 1 2013. Investment in Available for sale security-Oracle Corp              3,000 Cash                 3,000 (purchase of security) Dec 31.2013 investment Valuation Allowance A/c -Available for sale security                   800 Unrealized Holding Gain/(Loss) -OCI                 800 ( fair value adjustment) Feb 28 2013. investment Valuation Allowance A/c -Available for sale security                 800 Unrealized Holding Gain/(Loss) -OCI                   800 Investment in Available for sale security-Oracle Corp               3,000 Investment in Trading security-Oracle Corp              2,500 Unrealized Holding Gain/(Loss) -Income Statement                 500 ( reversal of investment Valuation allowance balance and   recording of invetsment as trading security as fair value)