Journ Co. purchased short-term investments in available-for-sale debt securities at a cost of $52,000 cash on November 25. At December 31, these securities had a fair value of $51,000. This is the first and only time the company has purchased such securities. 1. 2. & 3. Prepare the November 25 entry to record the purchase of debt securities, the December 31 year-end adjusting entry for the securities' portfolio, and the April 6 entry when Journ sells 10% of these securities ($5,200 cost) for $6,900 cash.

Question

Landen Mathews

Business

23 August, 17:03

Journ Co. purchased short-term investments in available-for-sale debt securities at a cost of $52,000 cash on November 25. At December 31, these securities had a fair value of $51,000. This is the first and only time the company has purchased such securities. 1. 2. & 3. Prepare the November 25 entry to record the purchase of debt securities, the December 31 year-end adjusting entry for the securities' portfolio, and the April 6 entry when Journ sells 10% of these securities ($5,200 cost) for $6,900 cash.

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Alden Lang · Answer 1

The journal entries are as follows

Explanation:

On November 25

Investment - available for sale securities $52,000

To Cash $52,000

(being the investment purchased for cash is recorded)

On December 31

Unrealized loss - equity Dr $1,000 ($52,000 - $51,000)

To Fair value adjustment - available for sale $1,000

(Being the fair value adjustment is recorded)

On April 6

Cash $6,900

Gain on sale of investment $1,700

To Short term investment - available for sale $5,200

(Being the sale of short term investment is recorded)

Only these entries are passed