Answer and Explanation:
The Journal entries are prepared below:-
a. Unrealized Holding Gain or Loss - Income Dr, $1,460
To Fair value Adjustment $1,460
(Being unrealized holding income is recorded)
b. Cash Dr, $8,770
Loss on Sale of Investment Dr, $430
To trading Equity Investment $9,200
(Being sale of the Colorado Co. stock during 2021 is recorded)
c. Fair value Adjustment Dr, $880
To Unrealized Holding Gain or Loss - Income $880
(Being adjustment of fair value is recorded)
Working note:
Stock Cost Fair Value Unrealized Gain(Loss)
Clemson Corp.
Stock $18,700 $17,690 -$1,010
Buffaloes Co.
stock $18,700 $19,130 $
430
Net unrealized gain (loss) -$580
2020 -$1,460
Fair value adjustment for 2021 -$880
