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Allushta [10]
3 years ago
5

Global Commerce Corporation purchased trading debt investments for $136,000 on December​ 31, 2018. There is a decrease of $3,400

in the fair value of the trading debt investments by the end of the year 2019. Which of the following is the correct journal​entry?
A Unrealized Holding
Losslong dash—Trading 3,400
Fair Value
Adjustmentlong dash—Trading 3,400
B. Fair Value
Adjustmentlong dash—Trading 3,400
Unrealized Holding
Losslong dash—Trading 3,400
C. Trading Debt Investments 3,400
Unrealized Holding
Losslong dash—Trading 3,400
D. Unrealized Holding
Losslong dash—Trading 3,400
Retained Earnings
Business
1 answer:
stellarik [79]3 years ago
3 0

Answer:

A. Unrealized Holding  Loss - Trading 3,400

Fair Value  Adjustment - Trading 3,400

Explanation:

Since this investment is classified as a trading investment, any change in its fair market value must be included in their income statement. The appropriate journal entry should be:

Dr Unrealized loss on trading security 3,400

     Cr Debt investments 3,400

This will decrease the carrying value of the debt investments in the balance sheet and the loss will be included in the 2019 income statement. The fair value adjustment account normally has a credit balance since it decreases the carrying value of the investment account.

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Answer:

$213,500

Explanation:

Given the information above, first, we'll determine increase in inventory

Increase inventory = Ending inventory - Beginning inventory

Increase inventory = $46,500 - $44,500

Increase inventory = $2,000

We will also calculate decrease in account payable

Decrease in accounts payable = Beginning accounts payable - Ending accounts payable

Decrease in accounts payable = $40,500 - $37,000

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Therefore,

Net operating cash flows = Net income - Increase inventory - Decrease in accounts payable

Net operating cash flows = $219,000 - $2,000 - $3,5000 = $213,500

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Answer: C. an implied contract.

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By walking in and leaving his clothes at the laundry, Bill got into an Implied Contract as it would be unfair for Tom to just clean his clothes with no payment.

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Answer:

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