On December 31, 2013, Lujack Co. held the following short-term available-for-sale securities. Cost Fair Value Nintendo Co. common stock $ 77,500 $ 84,475 Atlantic bonds payable 31,000 28,830 Kellogg Co. notes payable 55,800 52,452 McDonald's Corp. common stock 104,625 99,394 Lujack had no short-term investments prior to the current period. Prepare the December 31, 2013, year-end adjusting entry to record the fair value adjustment for these securities. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

On December 31, 2013, Lujack Co. held the following short-term available-for-sale securities.   

	Cost				Fair Value
Nintendo Co. common stock		$	77,500			$	84,475
Atlantic bonds payable			31,000				28,830
Kellogg Co. notes payable			55,800				52,452
McDonald's Corp. common stock			104,625				99,394

 

Lujack had no short-term investments prior to the current period. Prepare the December 31, 2013, year-end adjusting entry to record the fair value adjustment for these securities. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

 

Explanation:

Computation of Fair value adjustment

 

	Cost		Fair value			Unrealized gain (loss)
Nintendo Co. common stock	$	77,500		$	84,475
Atlantic bonds payable		31,000			28,830
Kellogg Co. notes payable		55,800			52,452
McDonald's Corp. common stock		104,625			99,394
	$	268,925		$	265,151		$	(3,774	)

 

Record fair value adjustment for securities ($265,151 − $268,925) = $(3,774)