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4 years ago

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During the current year, Reed Consulting Group acquired long-term available-for-sale securities at a $70,000 cost. At its Decemb

er 31 year-end, these securities had a fair value of $58,000. This is the first and only time the company purchased such securities.Prepare the necessary year-end adjusting entry related to these securities.

1 answer:

kipiarov [429]4 years ago

3 0

Answer:

Account Debit Credit

Unrealized loss (Equity) $12,000

Fair Value adjustment (Avaliable $12,000

for sale)

Explanation:

Given Data:

Long-term available-for-sale securities=$70,000

December 31, Securities fair values=$58,000

Required:

The necessary year-end adjusting entry related to these securities.

Solution:

Unrealized Loss occurred=$70,000-$58,000

unrealized Loss occurred=$12,000

Adjusting entry:

Account Debit Credit

Unrealized loss (Equity) $12,000

Fair Value adjustment (Avaliable $12,000

for sale)

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