ework Help Save & Exit Sub Saved Check my wo S 15-7 Available-for-sale securitie
ID: 2409574 • Letter: E
Question
ework Help Save & Exit Sub Saved Check my wo S 15-7 Available-for-sale securities LO P3 Journ Co. purchased short-term investments in available-for-sale securities at a cost of $63,000 on November 25, 2017 At December 31, 2017, these securities had a fair value of $58,700. This is the first and only time the company has purchased such secunities 1 8 3 Prepare the December 31,2017, year end adjusting entry for the securities portfolo and the April 6,2018, enty when Journ sells one-half of these securities for $32.760 View transaction listExplanation / Answer
1. Adjustment entry for the year end december 31, 2017
Entry to record the decrease in value of securities
Profit and Loss A/c Dr 4,300
To Short term investment 4,300
(Being short term investments to be valued at the year end cost or fair value which ever is less
to be recorded at $58,700 so, $4300 to be debited to profit and loss a/c decrease in value of investment )
2. Adjustment entry for the year end April 6, 2018
To record entry for sale of half of the investment
Bank A/c Dr 32,700
To Short term Investment (58700/2) 29,350
To Gain on investment 3,350
(Being entry to record the sale of investment, cost is 29,350 and sold for 32,700 @ a gain of 3,350 )
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