COLOR COMPANY

The investment

account of Color
Company as of December 31, 2010 shows the following: Jan. 31 Mar. 31 Sold Red ordinary Bought White ordinary 12,125 P 21,364

DATE
Jan. 1

EXPLANATION
Balance

DEBIT
P 188,300

CREDIT

Jun. 30
Jul. 31 Aug. 1

Dividend on Blue ordinary

Sold Blue ordinary Sold Green bonds

10,000
8,750 22,500

The audit working papers of the preceeding year show that the account balance as of 01.01.10, consisted of the following:

RED COMPANY ORDINARY 1000 shs., purchased June, 1997, P20/sh. 2000 shs., purchased August, 2000, P16/sh. 1500 shs., purchased May, 2008, P22/sh. WHITE COMPANY 2000 shs., purchased January, 2008, P33/sh. P 66,000 P 20,000 32,000 33,000

BLUE COMPANY ORDINARY 100 shs., purchased August, 1999, P73/sh. (P100 par) GREEN COMPANY ORDINARY 20 bonds, P1,000 each, purchased July, 2002, @ par (interest dates February 1, and August 1) P 20,000 P 7,300

The examination

of the aaccount
reveals the following:

1.

In January, 1000 ordinary shares of the Red Company purchased in May 2008, were sold for P21,364, net of brokerage.
In March, 2010, 500 ordinary shares of White Company were purchased at P24 per share plus brokerage for P12,125.

2.

3.

In June, 2010, the Blue Company paid a 100% share dividend ordinary on ordinary.
In June, 2010, the Color Company sold to its president, for P125 per share, 100 ordinary shares of Blue Company for which the president gave his check for P8,750 and a letter in which he agreed to pay the balance upon demand of the treasurer of the company. On August 1, 2010, the Green Company redeemed its 5% bonds at 110 plus accrued interest.

4.

5.

6.

The total market value of the securities at year-end amounted to P150,000.

REQUIRED

Prepare a worksheet analyzing the Investment in Trading Securities account for the period January 1, 2010 to December 31, 2010, showing transactions, adjustments, and final balance as of December 31, 2010.

COLOR COMPANY
INVESTMENT IN TRADING SECURITIES 12.31.10
Investment in TS Balance 1.1.10
Description Red Company, ordinary Purchased in June 1997 Purchased in Aug. 2000 Purchased in May, 2008 White Company, ordinary Purchased in Jan., 2008 Blue Company, ordinary Purchased in Aug., 1999 Green Company, 15% bonds Purchased in July, 2002 Total Investment in TS Balance, 12.31.10 No. of Description Shares Red Company, ordinary Purchased in June 1997 Purchased in Aug. 2000 Purchased in May, 2008 White Company, ordinary Purchased in Jan., 2008 Purchased in March, 2010 Blue Company, ordinary Purchased in Aug., 1999 Green Company, 15% bonds Purchased in July, 2002 Total L SD 1,000 P 2,000 500 2,000 500 100 20,000.00 P 32,000.00 11,636.00 66,000.00 12,125.00 8,550.00 (10,000.00) 5,100.00 P (636.00) P 20,000.00 32,000.00 11,000.00 66,000.00 12,125.00 No. of Shares Cost Average Cost Per Share Investment in TS Purchases Date Description March, 2010 June, 2010 White Company, ordinary Blue Company, ordinary

No. of Shares 500 100 SD P P

Amount 12,125.00 L

1,000 P 2,000
1,500 2,000 100 20 P

20,000 P 32,000
33,000 66,000 7,300 20,000 178,300 ^ Market Value

20 16
22 33 73 1000

Investment in TS Sales Date Description No. of Shares Amount

12,125.00 ^ Profit Ave. Cost (Loss)

Interest Income

Jan. 2010 Red Company, ordinary

Jul. 2010 Blue Company, ordinary Green Company, 15% Aug. 2010 bonds

1,000
100 20

P 21,364.00 R P 22,000.00 P (636.00)

12,500.00 R 22,500.00 R 3,650.00 20,000.00 8,850.00 2,000.00 500

PAJE Cost Adjustments Adjusted Balance

P 56,364.00 ^ Particulars (1) Loss on sale of investment Investment (2) Dividend income Investment

P 45,3650.00 P 10,214.00 P 500 ^ ^ Debit Credit 636 636 10,000 10,000

(3) Accounts receivable - President Investment Gain on sale of investment

(4) Investment Gain on sale of investment Interest income (5) Securities fair value adjusted Trading Unrealized gain in trading securities

3,750 5,100
8,850 2,500 2,000 500 5,225 5,225

3,650.00 144,775.00 ^

Traced to general ledger Traced to prior year's working paper Traced to broker's advice Stock dividend

(2,500.00) 2,500.00 147,811.00 P 150,000.00 P (3,036.00) P ^ ^ R Traced to cash receipts Minutes examined (purchases and sales approved by the board of directors) ^ Totals footed

Prepared By:

Kmontenegro / 10-13-11
Maria Kristine Montenegro