Yankton Company began the year without an investment portfolio. Durning the year

Question

Yankton Company began the year without an investment portfolio. Durning the year they purchased investments classified as trading securities at a cost of $13,000. At the end of the year, the market value of the secutities was $11,000. The Yankton Company's financial statememnts for the current year should show.

a. no loss on the income statement and net trading securities of $13,000 on the balance sheet.

b. a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet.

c. a loss of $2,000 on the income statement and net trading securities of $13,000 on the balance sheet.

d. no loss on the income statement, net trading securities of $11,000 and an unrealized loss of $2,000 as a stockholders' equity adjustment on the balance sheet.

Explanation / Answer

Yankton Company began the year without an investment portfolio. During the year they purchased investments classified as trading securities at a cost of $13,000. At the end of the year, the market value of the securities was $11,000. The Yankton Company's financial statements for the current year should show
b. a loss of $2,000 on the income statement and temporary investments of $11,000 on the balance sheet

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