Rios Financial Co. is a regional insurance company that beganoperations on January 1, Year...

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Rios Financial Co. is a regional insurance company that beganoperations on January 1, Year 1. The following transactions relateto trading securities acquired by Rios Financial Co., which has afiscal year ending on December 31: Record these transactions onpage 10: Year 1 Feb. 1. Purchased 6,300 shares of Caldwell Inc. asa trading security at $41 per share plus a brokerage commission of$630. May 1. Purchased 1,700 shares of Holland Inc. as a tradingsecurity at $47 plus a brokerage commission of $187. July 1. Sold3,280 shares of Caldwell Inc. for $39 per share less a $110brokerage commission. 31. Received an annual dividend of $0.35 pershare on Caldwell Inc. stock. Dec. 31. The portfolio of tradingsecurities was adjusted to fair values of $39 and $46 per share forCaldwell Inc. and Holland Inc., respectively. Record thesetransactions on page 11: Year 2 Apr. 1. Purchased 2,700 shares ofFuller Inc. as a trading security at $28 per share plus a $135brokerage commission. July 31. Received an annual dividend of $0.40per share on Caldwell Inc. stock. Oct. 14. Sold 540 shares ofFuller Inc. for $30 per share less a $55 brokerage commission. Dec.31 The portfolio of trading securities had a cost of $264,797 and afair value of $341,549, requiring a debit balance in ValuationAllowance for Trading Investments of $76,752 ($341,549 - $264,797).Thus, the credit balance from December 31, Year 1, is to beadjusted to the new balance.
Required: 1. Journalize the entries to record thesetransactions. Round all final amounts to the nearest wholedollar.*
2. Prepare the investment-related current asset balance sheetpresentation for Rios Financial Co. on December 31, Year 2.*
3. How are unrealized gains or losses on trading investmentspresented in the financial statements of Rios Financial Co.? *Referto the information given and the Chart of Accounts and AmountDescriptions provided for the exact wording of the answer choicesfor text entries. “Less” or “Plus” will automatically appear if itis required. For those boxes in which you must enter subtracted ornegative numbers use a minus sign.
CHART OF ACCOUNTSRios Financial Co.General Ledger
ASSETS
110 Cash
111 Petty Cash
120 Accounts Receivable
121 Allowance for Doubtful Accounts
131 Notes Receivable
132 Interest Receivable
141 Merchandise Inventory
145 Office Supplies
146 Store Supplies
151 Prepaid Insurance
161 Investments-Caldwell Inc.
162 Investments-Holland Inc.
163 Investments-Fuller Inc.
165 Valuation Allowance for Trading Investments
166 Valuation Allowance for Available-for-Sale Investments
181 Land
191 Store Equipment
192 Accumulated Depreciation-Store Equipment
193 Office Equipment
194 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Notes Payable
231 Interest Payable
241 Salaries Payable
251 Sales Tax Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Treasury Stock
332 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
350 Unrealized Gain (Loss) on Available-for-Sale Investments
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
611 Interest Revenue
612 Dividend Revenue
631 Gain on Sale of Investments
641 Unrealized Gain on Trading Investments
EXPENSES
511 Cost of Merchandise Sold
512 Bad Debt Expense
515 Credit Card Expense
516 Cash Short and Over
520 Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
561 Depreciation Expense-Store Equipment
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
731 Loss on Sale of Investments
741 Unrealized Loss on Trading Investments
Amount Descriptions
Increase in retained earningsNet, incomeNet lossOthercomprehensive income (loss)Other income (loss)Retained earnings,December 31, Year 2Retained earnings, January 1, Year 2Tradinginvestments (at cost)Trading investments (at fair value)
1a. Journalize the entries to record these transactions. Referto the information given and the Chart of Accounts provided for theexact wording of the answer choices for text entries. In yourcomputations, round per share amounts to two decimal places. Roundall final amounts to the nearest whole dollar.
2. Prepare the investment-related current asset balance sheetpresentation for Rios Financial Co. on December 31, Year 2. Referto the information given and the Chart of Accounts and AmountDescriptions provided for the exact wording of the answer choicesfor text entries. “Less” or “Plus” will automatically appear if itis required. For those boxes in which you must enter subtracted ornegative numbers use a minus sign.

	ASSETS
110	Cash
111	Petty Cash
120	Accounts Receivable
121	Allowance for Doubtful Accounts
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
161	Investments-Caldwell Inc.
162	Investments-Holland Inc.
163	Investments-Fuller Inc.
165	Valuation Allowance for Trading Investments
166	Valuation Allowance for Available-for-Sale Investments
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
231	Interest Payable
241	Salaries Payable
251	Sales Tax Payable

	EQUITY
311	Common Stock
312	Paid-In Capital in Excess of Par-Common Stock
321	Preferred Stock
322	Paid-In Capital in Excess of Par-Preferred Stock
331	Treasury Stock
332	Paid-In Capital from Sale of Treasury Stock
340	Retained Earnings
350	Unrealized Gain (Loss) on Available-for-Sale Investments
351	Cash Dividends
352	Stock Dividends
390	Income Summary

	REVENUE
410	Sales
611	Interest Revenue
612	Dividend Revenue
631	Gain on Sale of Investments
641	Unrealized Gain on Trading Investments

	EXPENSES
511	Cost of Merchandise Sold
512	Bad Debt Expense
515	Credit Card Expense
516	Cash Short and Over
520	Salaries Expense
531	Advertising Expense
532	Delivery Expense
533	Repairs Expense
534	Selling Expenses
535	Rent Expense
536	Insurance Expense
537	Office Supplies Expense
538	Store Supplies Expense
561	Depreciation Expense-Store Equipment
562	Depreciation Expense-Office Equipment
590	Miscellaneous Expense
710	Interest Expense
731	Loss on Sale of Investments
741	Unrealized Loss on Trading Investments

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In: AccountingRios Financial Co. is a regional insurance company that beganoperations on January 1, Year 1....Rios Financial Co. is a regional insurance company that beganoperations on January 1, Year 1. The following transactions relateto trading securities acquired by Rios Financial Co., which has afiscal year ending on December 31: Record these transactions onpage 10: Year 1 Feb. 1. Purchased 6,300 shares of Caldwell Inc. asa trading security at $41 per share plus a brokerage commission of$630. May 1. Purchased 1,700 shares of Holland Inc. as a tradingsecurity at $47 plus a brokerage commission of $187. July 1. Sold3,280 shares of Caldwell Inc. for $39 per share less a $110brokerage commission. 31. Received an annual dividend of $0.35 pershare on Caldwell Inc. stock. Dec. 31. The portfolio of tradingsecurities was adjusted to fair values of $39 and $46 per share forCaldwell Inc. and Holland Inc., respectively. Record thesetransactions on page 11: Year 2 Apr. 1. Purchased 2,700 shares ofFuller Inc. as a trading security at $28 per share plus a $135brokerage commission. July 31. Received an annual dividend of $0.40per share on Caldwell Inc. stock. Oct. 14. Sold 540 shares ofFuller Inc. for $30 per share less a $55 brokerage commission. Dec.31 The portfolio of trading securities had a cost of $264,797 and afair value of $341,549, requiring a debit balance in ValuationAllowance for Trading Investments of $76,752 ($341,549 - $264,797).Thus, the credit balance from December 31, Year 1, is to beadjusted to the new balance.Required: 1. Journalize the entries to record thesetransactions. Round all final amounts to the nearest wholedollar.*2. Prepare the investment-related current asset balance sheetpresentation for Rios Financial Co. on December 31, Year 2.*3. How are unrealized gains or losses on trading investmentspresented in the financial statements of Rios Financial Co.? *Referto the information given and the Chart of Accounts and AmountDescriptions provided for the exact wording of the answer choicesfor text entries. “Less” or “Plus” will automatically appear if itis required. For those boxes in which you must enter subtracted ornegative numbers use a minus sign.CHART OF ACCOUNTSRios Financial Co.General LedgerASSETS110Cash111Petty Cash120Accounts Receivable121Allowance for Doubtful Accounts131Notes Receivable132Interest Receivable141Merchandise Inventory145Office Supplies146Store Supplies151Prepaid Insurance161Investments-Caldwell Inc.162Investments-Holland Inc.163Investments-Fuller Inc.165Valuation Allowance for Trading Investments166Valuation Allowance for Available-for-Sale Investments181Land191Store Equipment192Accumulated Depreciation-Store Equipment193Office Equipment194Accumulated Depreciation-Office EquipmentLIABILITIES210Accounts Payable221Notes Payable231Interest Payable241Salaries Payable251Sales Tax PayableEQUITY311Common Stock312Paid-In Capital in Excess of Par-Common Stock321Preferred Stock322Paid-In Capital in Excess of Par-Preferred Stock331Treasury Stock332Paid-In Capital from Sale of Treasury Stock340Retained Earnings350Unrealized Gain (Loss) on Available-for-Sale Investments351Cash Dividends352Stock Dividends390Income SummaryREVENUE410Sales611Interest Revenue612Dividend Revenue631Gain on Sale of Investments641Unrealized Gain on Trading InvestmentsEXPENSES511Cost of Merchandise Sold512Bad Debt Expense515Credit Card Expense516Cash Short and Over520Salaries Expense531Advertising Expense532Delivery Expense533Repairs Expense534Selling Expenses535Rent Expense536Insurance Expense537Office Supplies Expense538Store Supplies Expense561Depreciation Expense-Store Equipment562Depreciation Expense-Office Equipment590Miscellaneous Expense710Interest Expense731Loss on Sale of Investments741Unrealized Loss on Trading InvestmentsAmount DescriptionsIncrease in retained earningsNet, incomeNet lossOthercomprehensive income (loss)Other income (loss)Retained earnings,December 31, Year 2Retained earnings, January 1, Year 2Tradinginvestments (at cost)Trading investments (at fair value)1a. Journalize the entries to record these transactions. Referto the information given and the Chart of Accounts provided for theexact wording of the answer choices for text entries. In yourcomputations, round per share amounts to two decimal places. Roundall final amounts to the nearest whole dollar.2. Prepare the investment-related current asset balance sheetpresentation for Rios Financial Co. on December 31, Year 2. Referto the information given and the Chart of Accounts and AmountDescriptions provided for the exact wording of the answer choicesfor text entries. “Less” or “Plus” will automatically appear if itis required. For those boxes in which you must enter subtracted ornegative numbers use a minus sign.