Loreal-American Corporation purchased several marketable
securities during 2018. At December 31, 2018, the company had the
investments in bonds listed below. None was held at the last
reporting date, December 31, 2017, and all are considered
securities available-for-sale.
Cost | Fair Value |
Unrealized Holding Gain (Loss) |
||||||||||
Short term: | ||||||||||||
Blair, Inc. | $ | 504,000 | $ | 393,000 | $ | (111,000 | ) | |||||
ANC Corporation | 462,000 | 504,000 | 42,000 | |||||||||
Totals | $ | 966,000 | $ | 897,000 | $ | (69,000 | ) | |||||
Long term: | ||||||||||||
Drake Corporation | $ | 504,000 | $ | 572,000 | $ | 68,000 | ||||||
Aaron Industries | 708,000 | 672,000 | (36,000 | ) | ||||||||
Totals | $ | 1,212,000 | $ | 1,244,000 | $ | 32,000 | ||||||
Required:
1. Prepare appropriate adjusting entries at
December 31, 2018. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
Short-term investments are marked to market, and any declines or increases in value are recognized as a loss or profit.
Available for sale long-term investments are recorded at cost when
purchased and subsequently adjusted to reflect their fair values at
the end of the reporting period. Unrealized holding gains or losses
are kept as "other comprehensive income" until the long-term
investment has been sold.
1. Unrealised loss on Bond 111000
to Bond (Blair) A/c 111000
2. Bond (ANC) A/c 42000
to Unrealised Profit on Bond 42000
3. Bond (Drake) A/c 68000
to Unrealised Gain (Other Comprehensive Income) 68000
4. Unrealised Loss (Other Comprehensive Income) 36000
to Bond (Aaron) 36000
Get Answers For Free
Most questions answered within 1 hours.