ework Help Save Exit Sub Saved Check my wo S 157 Availablef

ework Help Save & Exit Sub Saved Check my wo S 15-7 Available-for-sale securities LO P3 Journ Co. purchased short-term investments in available-for-sale securities at a cost of $63,000 on November 25, 2017 At December 31, 2017, these securities had a fair value of $58,700. This is the first and only time the company has purchased such secunities 1 8 3 Prepare the December 31,2017, year end adjusting entry for the securities portfolo and the April 6,2018, enty when Journ sells one-half of these securities for $32.760 View transaction list

Solution

1. Adjustment entry for the year end december 31, 2017

Entry to record the decrease in value of securities

Profit and Loss       A/c                Dr                              4,300

     To Short term investment                                                        4,300

(Being short term investments to be valued at the year end cost or fair value which ever is less

to be recorded at $58,700 so, $4300 to be debited to profit and loss a/c decrease in value of investment )

2. Adjustment entry for the year end April 6, 2018

To record entry for sale of half of the investment

Bank             A/c                     Dr                      32,700

To Short term Investment (58700/2)                                           29,350

To Gain on investment                                                                    3,350

(Being entry to record the sale of investment, cost is 29,350 and sold for 32,700 @ a gain of 3,350 )