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forsale [732]
3 years ago
7

On January 1, Bargain Company's Valuation Allowance for Trading Investments account had a debit balance of $18,500. On December

31, the cost of the trading securities portfolio is $80,000. The fair value is $100,000. Which of the following would Bargain Company report?1. Unrealized Loss on Trading Investments of $1,500.2. Unrealized Gain on Trading Investments of $20,000.3. Unrealized Gain on Trading Investments of $1,500.4. Unrealized Loss on Trading Investments of $20,000.
Business
1 answer:
natulia [17]3 years ago
4 0

Answer:

3) Unrealized Gain on Trading Investments of $1,500.

Explanation:

By January 1, Bargain Company had recognized a $18,500 gain on their investment (the valuation allowance account had a debit balance = gain). By the end of the year, the gain on the investment had increased to $20,000 (= $100,000 - $80,000), so you need to recognize an additional gain of $1,500 (= $20,000 - $18,500).

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