Saturday, 3 January 2015

Zippydah Company has the following data at December 31, 2012. Securities Cost Fair Value Trading $119,010 $125,370 Available-for-sale 103,870 91,090 The available-for-sale securities are held as a long-term investment. (a) Prepare the adjusting entries to report 1. Trading securities at fair value and 2. Available-for-sale securities at fair value.

Zippydah Company has the following data at December 31, 2012.

Securities

Cost

Fair Value
Trading
$119,010
$125,370
Available-for-sale
103,870
91,090

The available-for-sale securities are held as a long-term investment.

(a) Prepare the adjusting entries to report 1. Trading securities at fair value and 2. Available-for-sale securities at fair value.
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Explanation
(a) (1) Market Adjustment-Trading ($125,370 – $119,010) = $6,360

(a) (2) Unrealized Gain or Loss-Equity ($103,870 – $91,090) = $12,780