Question

Create T-Accounts to record transaction

During the year, the company sold Available-for-sale securities in the amount of $113,294 and purchased $95,091. Assume no gain or loss on the sale. The fair market value of the securities was $261,828 at year end.

Answer 1

Security Available for sale A/c

Particulars	Amount	Particulars	Amount
To Bal c/f (Opening balance)	113294	By Sale of Asset A/c	113294
To Bank A/c	95091
		By Balance c/f	95091
Total	208385		208385

Sale of Asset A/c

Particulars	Amount	Particulars	Amount
To Security Available for sale A/c	113294	By Bank A/c	113294
Total	113294	Total	113294

Note :

1 .Short term investment (includes Investment held for sale) are valued at lower of cost and fair value.

So market value of security is higher than book value (cost). So valued at book value.

2. There Bank account will be created including entry for purchase and sale and having closing balance of $ 18203.

Hope this meet your requirements please let me know in case any clarification required. Thanks