Answer:
This means that there is an increase in cash(cash has been collected). And for the unearned revenue which is a liability, there is an increase in the liability
Explanation:
This means that there is an increase in cash(cash has been collected). And for the unearned revenue which is a liability, there is an increase in the liability.
Note: Debit side increases asset(cash) and expenses while credit side decreases liability,income and equity.
Credit side decreases asset(cash) and expenses while debit side increases liability,income and equity.
Answer:
The effect on the sale of PV1 would be $3,000 and on PV2 it is $1,500
Explanation:
For computing the effect on the ordinary income, we have to do the following adjustment which is shown below:
PV1 = Sale price-adjusted basis
= $8,000 - $5,000
= $3,000
The $3,000 represent the short term capital gain, and it is a short term capital gain because the equipment is sold in less than 1 year
PV2 = Sale price-adjusted basis
= $16,000 - $18,000
= - $2,000
The $ -2,000 represents the long term capital loss , and it is a long term capital loss because the equipment is sold in more than 1 year
So, the effect on the sale of PV1 would be $3,000 and on PV2 it is $1,500 because the deduction is allowed to a maximum of $1,500
Answer:
a. Journal Entry:
Investments in Debt securities (Dr.) $1500
Fair Value of Debt securities(Cr.) $1500
b. Equity Section:
Common Stock $65,000
Retained Earnings $22,000
Treasury Stock $13,400
Revaluation of Debt securities $1,500
Explanation:
Investments in AFS Debt securities 40,000
Fair value of the investment on 12/31/2018 is $41,500
The difference between fair value and reported value will be adjusted through journal entry. The difference is of $1500 (41,500 - 40,000) is the revaluation amount of the securities.
