Chapter 12 - Investments (Spiceland - Intermediate Accounting) Bradley Company h

Question

Chapter 12 - Investments (Spiceland - Intermediate Accounting)

Bradley Company had the following portfolio of securities on its books at December 31, 2017 and December 31, 2018. All securities were purchased during 2016.

Prepare the necessary general journal entries for 2017 and 2018 to adjust both the trading securities and available-for-sale securities to fair value.

Fair Value 12/31/18 S20,000 S20,000 $25,000 S50,000 $70,000 Fair Value Security Classification Trading Trading Trading Available-for-Sale Available-for-Sale Cost $25,000 $13,000 $35,000 $210,000 $50,000 $13,000 $20,000 $30,000 $130,000 560,000

Explanation / Answer

Solution:-

YEAR 2017:-

YEAR 2018:-

Debit Credit (A) Unrealized loss on trading securities 12000 To Trading securities 12000 (B) Trading securities 7000 To Unrealized gain on trading securities 7000 (C) Unrealized loss on trading securities 5000 To Trading securities 5000 (D) Unrealized gain/loss – other comprehensive income 80000 To Available for sale securities 80000 (E) Available for sale securities 10000 To Unrealized gain/loss – other comprehensive income account 10000

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