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Transfer of Categories – Journal Questions

Journal Questions

Transfer the following from AFS to trading category.
Aspen Onshore Fund LLC traded in Epson shares that are listed on the New York Stock Exchange through Remount stockbrokers. The details are as follows:
Trade Details
Date                  Product             Quantity           Rate          B/S           Brokerage
11-Jan-X1         Epson                2,000             $97             B                  $300
27-Jan-X1         Epson                1,200             $99             S                  $180
05-Feb-X1        Epson                1,500             $103           B                  $225
25-Mar-X1        Epson                1,000             $100           S                  $150

Other Details
  Settlement: T + 2

Liquidation Method
  FIFO

Market Rate
  January 31: 101.00
  February 28: 98
  March 31: 97.85

The shares were bought without any intention of trading, nor was this meant to be a long-term investment. However, management changed its mind and decided that Epson shares would be classified as trading shares on March 31, on which date the market rate of Epson shares was $104. Aspen Onshore Fund is charged tax on its earnings at an average rate of 40 percent. Prepare the accounts through March 31.

Prepare Journal entries, general ledgers, trial balance, income statement, and balance sheet.

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