The Jersey Division of Yankee Products has invested capital of $1,400,000. This division incurred $80,000 in interest expense and $140,000 in income tax expense. If this division reported a return on investment of 14 percent, how much is net operating profit after taxes

Journal Entries

Dr. Investment in Apple stock                  $3,600

Dr. Investment in Under Armour stock    $800

Cr. Investment in Chipotle stock              $1,700

Cr. Unrealized gain Investments              $2,700

Explanation:

The Investments held at the fair value should be revalued at each period end and record the gain or loss arising from the fair value adjustments. This done to present the true position of the investments . Increase in the fair value as compared to prior value or cost will result as gain and decrease as loss.

Following is the working to make fair value adjustment.

                                   Cost        Fair Value   Difference

Apple stock               $5,700     $9,300         Increased by $3,600

Chipotle stock           $3,300     $1,600         Decreased by $1,700

Under Armour stock $12,900    $13,700       Increased by $800