Question

Facts:

Bakersfield’s debt portfolio* at 12/31/20 is as follows:

Stock	COST
D…….	$175,000
E…….	125,000
F…….	230,000
	$530,000
Stock	FMV
D…….	$150,100
E…….	140,000
F…….	255,000
	$545,100
Stock	Gain (Loss) Not Recongnized
D…….	($24,900)
E…….	15,000
F…….	25,000
Total	15,100
Prior fmv adjustment balance – Debit	4,000
F.V. Adj. – Debit	$11,100

*The debt portfolio is classified as available for sale.

On January 24, 2021, Bakersfield Company sold security D for $150,100. (Note: The sales proceeds are net of brokerage fees.)

Instructions:

1. Prepare the adjusting entry at December 31, 2020, to report the portfolio a fair value.

b.Prepare the journal entry for the 2021 sale of Security D

Answer 1

Answer is attached below