Question

Help Suve & Brooks Co. purchases debt investments as trading securities at a cost of $51,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $66.000 1. Prepare the December 27 entry for the purchase of debt investments 2. & 3. Prepare the December 31 year-end fair value adjusting entry for the trading securities' portfolio and the January 3 entry when Brooks sells a portion of its trading securities (costing $25,500) for $29.250 cash. Complete this question by entering your answers in the tabs below. Req1 Req 2 and 3 Prepare the December 27 entry for the purchase of debt investments. View transaction list Journal entry worksheet Record purchase of trading securities. Note: Enter debits before credits Date Credit General Journal Fair value adjustment Trading Unrealized gain. Income Debit 6.000 Dec 27 5.000

Answer 1

Ans:

Date	Account title and explanation	Debit($)	Credit($)
Dec 27	Investments- Trading	$51,000
	Cash		$51,000
	(to record purchase of investments)
Dec 31	Fair value adjustment**	$15,000
	Unrealized gain income		$15,000
	(to record fair value of investment)
Jan 3	Cash	$29,250
	Gain on sale of investments		$ 3,750
	Short term investments-trading		$25,500
	( to record sale of portion of investment)

**= 66,000-51,000

= 15,000