Borchert Co. purchases various investments in trading securities at a cost of $7

Question

Borchert Co. purchases various investments in trading securities at a cost of $76,000 on December 27, 2009. (This is its first and only purchase of such securities.) At December 31, 2009, these securities had a market value of $85,000.


Requirement 1:

Prepare the December 31, 2009, year-end adjusting entry for the trading securities' portfolio.

Date General Journal Debit Credit
Dec. 31, 2009






Requirement 2:

Prepare the January 3, 2010, entry when Borchert sells a portion of its trading securities (that had originally cost $38,000) for $40,250.


Date General Journal Debit Credit
Jan. 3, 2010

Explanation / Answer

DR Fair value adjustment 9,000 CR Net unrealized holdings gains and losses 9,000 DR Cash 40,250 CR Investment in trading securities 38,000 CR Gain on sale of investments 2,250 (Fair value adjustment and net unrealized holdings are adjusted at the end of the accounting period)

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.