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Brooks Co. purchases various investments in trading securities at a cost of $63,000 on December 27, 2017. (This is its first and only purchase of such securities.) At December 31, 2017, these securities had a fair value of $82,000.

Prepare the December 31, 2013, year-end adjusting entry for the trading securities' portfolio.

Prepare the January 3, 2014, entry when Brooks sells a portion of its trading securities (that had originally cost $33,000) for $35,000.

Respuesta :

Answer:

Journal Entry

Explanation:

1. Trading Securities Dr,                        $19,000  

            To unrealized gain on trading Securities  $19,000

(Working note = $82,000 - $63,000)

( To record unrealized gain on security)  

2. Cash Dr,                                             $35,000  

To Trading Securities                                     $33,000

To gain on sale of trading Securities             $2,000

(To record trading securities)

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