Exercise 153 Accounting for trading securities LO P1 Brooks

Exercise 15-3 Accounting for trading securities LO P1 Brooks Co. purchases various investments in trading securities at a cost of $61,000 on December 27,2017 This is its first and only purchase of such securities) At December 31, 2017, these securities had a fair value of $67000 1. & 3. Prepare the December 31, 2017, year-end adjusting entry for the trading securities\' portfolio and the January 3, 2018, entry when ok Brooks sells a portion of its trading securities (that had originally cost $30,500) for $32.000 (If no entry is required fora transaction/event, select \"No journal entry required\" in the first account field.)

Solution

31 Dec 2017 Fair value adjustment—Trading              6,000    Unrealized gain—Income                                                   6,000 03 Jan 2018 Cash            32,000    Gain on sale of short­term investments                                                   1,500    Short­term investments—Trading                                                30,500