Answer:
The full question is as follows <em>"The following accounts were among those reported on Good Corp.'s balance sheet at December 31, year 1: Available-for-sale securities (market value $140,000) $80,000 Preferred stock, $20 par value, 20,000 shares issued and outstanding 400,000 Additional paid-in capital on preferred stock 30,000 Retained earnings 900,000 On January 20, year 2, Good exchanged all of the available-for-sale securities for 5,000 shares of Good's preferred stock. Market values at the date of the exchange were $150,000 for the available-for-sale securities and $30 per share for the preferred stock. The 5,000 shares of preferred stock were retired immediately after the exchange. Prepare the general journal entry, without explanation, to record this event."</em>
Date General Journal Entry Debit Credit
Preferred stock A/c $100,000
(5000*$20)
Add. paid-in capital on preferred stock $7,500
(30000 * 1/ 4)
Retained earnings $42,500
Trading securities A/c $140,000
Gain on exchange of securities $10,000
