Answer the following question based on the partial balance sheet provided below.The balance sheet for BCS,Inc.for December 31,2012 and December 31,2011 is provided below.You are working on the audit for the 12/31/12 year-end.The 12/31/11 balance sheet numbers were audited by your auditing firm last year.You have been assigned to audit the investment account for the company. $\begin{array}{l}
\
Cash\
\text{Trading Investment Securities}\
\text{Allowance for Trading Securities}\
\text{Accounts Receivable}\
\text{Raw Materials Inventory}\
\text{WIP Inventory}\
\text{Finished Goods Inventory}\
\text{Land}\
\text{Building}\
\text{Accumulated Depreciation-Building}\
\text{Construction-in-Progress}\
\text{Accumulated Depreciation-CIP}\
\text{Held-to-Maturity Securities}\
\text{Available for Sale Securities}\
\text{Allowance for Available-for-Sale Securities}\
\end{array}
\begin{array}{rr}
{12 / 31 / 2012}&{12 / 31 / 2011}\
\hline
{25,439} & {32,786} \
345,000 & 436,000 \
54,738 & -23,412 \
120,334 & 143,023 \
275,963 & 345,768 \
34,087 & 32,635 \
348,974 & 438,678 \
2,300,000 & 3,444,567 \
2,256,876 & 2,345,987 \
-1,200,000 & -1,000,000 \
2,345,678 & 2,112,473 \
-100,000 & -75,000 \
1,200,765 & 1,100,325 \
2,100,000 & 3,145,000 \
-786,000 & -943,000
\end{array}$ The following investment securities were purchased during 2012:
$200,000 of trading securities
$100,440 of held-to-maturity securities and
$300,000 of available-for-sale securities
a.Determine the amount of trading securities that were sold during the year.b.Assume that one available-for-sale security was sold for $500,000.The original cost of the investment was $625,000.The market value of the stock on 12/31/11 was $425,000.Prepare the journal entry to record the sale.c.Prepare the journal entry to record the valuation allowance for the trading securities at 12/31/12.d.What is the impact on the income statement of holding investment securities at 12/31/12?
e.What is the GAAP rule for recording investment security purchases?
f.What is the GAAP rule for valuing investment securities at year-end?

Question

Quizplus · Accepted Answer

The Answer of Answer the following question based on the partial balance sheet provided below.The balance sheet for BCS,Inc.for December 31,2012 and December 31,2011 is provided below.You are working on the audit for the 12/31/12 year-end.The 12/31/11 balance sheet numbers were audited by your auditing firm last year.You have been assigned to audit the investment account for the company. $\begin{array}{l}
\
Cash\
\text{Trading Investment Securities}\
\text{Allowance for Trading Securities}\
\text{Accounts Receivable}\
\text{Raw Materials Inventory}\
\text{WIP Inventory}\
\text{Finished Goods Inventory}\
\text{Land}\
\text{Building}\
\text{Accumulated Depreciation-Building}\
\text{Construction-in-Progress}\
\text{Accumulated Depreciation-CIP}\
\text{Held-to-Maturity Securities}\
\text{Available for Sale Securities}\
\text{Allowance for Available-for-Sale Securities}\
\end{array}
\begin{array}{rr}
{12 / 31 / 2012}&{12 / 31 / 2011}\
\hline
{25,439} & {32,786} \
345,000 & 436,000 \
54,738 & -23,412 \
120,334 & 143,023 \
275,963 & 345,768 \
34,087 & 32,635 \
348,974 & 438,678 \
2,300,000 & 3,444,567 \
2,256,876 & 2,345,987 \
-1,200,000 & -1,000,000 \
2,345,678 & 2,112,473 \
-100,000 & -75,000 \
1,200,765 & 1,100,325 \
2,100,000 & 3,145,000 \
-786,000 & -943,000
\end{array}$ The following investment securities were purchased during 2012:
$200,000 of trading securities
$100,440 of held-to-maturity securities and
$300,000 of available-for-sale securities
a.Determine the amount of trading securities that were sold during the year.b.Assume that one available-for-sale security was sold for $500,000.The original cost of the investment was $625,000.The market value of the stock on 12/31/11 was $425,000.Prepare the journal entry to record the sale.c.Prepare the journal entry to record the valuation allowance for the trading securities at 12/31/12.d.What is the impact on the income statement of holding investment securities at 12/31/12?
e.What is the GAAP rule for recording investment security purchases?
f.What is the GAAP rule for valuing investment securities at year-end?

Answer the Following Question Based on the Partial Balance Sheet