SL Financial buys and sells securities which it classifies a

S&L; Financial buys and sells securities which it classifies as available-for-sale. On December 27, 2018, s8L purchased Ooca-Cola bonds at par for $892,000 and sold the bonds on January 3, 2019, for $900,000. At December 31, the bonds had a fair value of $885,000, and S&L; has the intent and ability to hold the investment until fair value recovers. Prepare journal entries to record (a) any unrealized gains or losses occurring in 2018 and (b) the sale of the bonds in 2019, including recognition of any unrealized gains in 2019 prior to sale and reclassification of amounts out of OCI. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.) View transaction list 1 Record the entry for Fair value adjustment of December 31, 2018. 2 Record the entry to adjust to fair value on the date of sale 3 Record the entry to reverse the previous fair value adjustment. Credit 4 Record the entry for sale of Investment in Coca Cola bonds Note : journal entry has been entered

Solution

Journal Entries Date                              General Journal                        Debit Credit 12/31/2017 Investment in Coco-Cola shares 892,000 Cash 892,000 12/31/2017 Net unrealized holding gain or loss-OCI 7000 Fair value adjustment 7,000 (892,000-885,000) 1/3/2018 Cash 900,000 Gain on sale of investment 8,000 investment in coco cola share 892,000 1/3/2018 Fair value adjustment 7,000 Net unrealized holding gain or loss-OCI 7,000