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James Corp. buys and sells debt securities which it classifies as available-for-sale securities. The company's fiscal...

James Corp. buys and sells debt securities which it classifies as available-for-sale securities. The company's fiscal year ends on Dec. 31. On Dec. 27,2021, James purchased Northwest Communications bonds at par for $1,000. At Dec. 31, the bonds had a fair value of $1200. On Jan. 3, 2022, the bonds were sold for $3000. The amount included in 2022 Jame's other comprehensive income as a result of this investment would be?

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Answer #1

The amount included in 2022 Jame's other comprehensive income as a result of this investment would be -200

In the first year-2021, the entry to record fair value will be

Investments-Available for sale-Dr    200

Gain on available for sale securities           200

(Other comprehensive income)

In the second year-2022, Cash received is recorded as 3000

Entry for recording the gain on transaction will be

Investments-Available for sale-Dr    1800

(3000-1200)

Loss on avalable for sale securities-Dr 200

(other comprehensive income)

Gain on available for sale securities           2000

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