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11 November, 21:13

During the current year, Reed Consulting Group acquired long-term available-for-sale securities at a $70,000 cost. At its December 31 year-end, these securities had a fair value of $58,000. This is the first and only time the company purchased such securities. Prepare the necessary year-end adjusting entry related to these securities.

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  1. 11 November, 21:23
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    Account Debit Credit

    Unrealized loss (Equity) $12,000

    Fair Value adjustment (Avaliable $12,000

    for sale)

    Explanation:

    Given dа ta:

    Long-term available-for-sale securities=$70,000

    December 31, Securities fair values=$58,000

    Required:

    The necessary year-end adjusting entry related to these securities.

    Solution:

    Unrealized Loss occurred=$70,000-$58,000

    unrealized Loss occurred=$12,000

    Adjusting entry:

    Account Debit Credit

    Unrealized loss (Equity) $12,000

    Fair Value adjustment (Avaliable $12,000

    for sale)
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