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, S&L; purchased Coca-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. (lf no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.) View transaction list 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. Record the entry to reverse the previous fair value adjustment. 3 Credit 4 Record the entry for sale of Investment in Coca Cola bonds. Note : = journal entry has been entered

Solution

Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Investment in Coca-Cola Shares        892,000.00 Cash        892,000.00 (record the purchase of Coca-Cola Shares) 2 Net Unrealized Holding Gains & Losses - OCI            7,000.00 Fair Value adjustment            7,000.00 (Record the fair value adjustement) 3 Fair Value adjustment            7,000.00 Net Unrealized Holding Gains & Losses - OCI            7,000.00 (record the entry to reverse the fair value adjustment) 4 Cash        900,000.00 Gain on Investment            8,000.00 Investment in Coca-Cola Shares        892,000.00 (record the sale of Shares)