1. Prepare appropriate adjusting entry at December 31, 2024. 2. What amount would be reported in the income statement at December 31, 2024, as a result of the adjusting entry?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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### Journal Entry for Adjusting Investment Loss at December 31, 2024

#### Required
1. Prepare appropriate adjusting entry at December 31, 2024.
2. What amount would be reported in the income statement at December 31, 2024, as a result of the adjusting entry?

#### Instructions
Complete this question by entering your answers in the tabs below.

---

### Required 1
**Prepare appropriate adjusting entry at December 31, 2024.**

*Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.*

**General Journal:**
| Date | Account | Debit | Credit |
|------|---------|-------|--------|
| December 31, 2024 | Loss on investments (unrealized, OCI) | 38,000 | |
| | Fair value adjustment | | 38,000 |

---

### Required 2

(Instructions to be provided for the next steps in completing the adjustment process.)

---

### Navigation
- **Prev Page:** 7 of 14
- **Next Page:** (Navigation button for next entry)

---

This information is designed to assist students in understanding the process of making an adjusting journal entry for unrealized losses on investments. It is important to regularly assess investments and adjust their values to reflect fair market conditions accurately.
Transcribed Image Text:### Journal Entry for Adjusting Investment Loss at December 31, 2024 #### Required 1. Prepare appropriate adjusting entry at December 31, 2024. 2. What amount would be reported in the income statement at December 31, 2024, as a result of the adjusting entry? #### Instructions Complete this question by entering your answers in the tabs below. --- ### Required 1 **Prepare appropriate adjusting entry at December 31, 2024.** *Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.* **General Journal:** | Date | Account | Debit | Credit | |------|---------|-------|--------| | December 31, 2024 | Loss on investments (unrealized, OCI) | 38,000 | | | | Fair value adjustment | | 38,000 | --- ### Required 2 (Instructions to be provided for the next steps in completing the adjustment process.) --- ### Navigation - **Prev Page:** 7 of 14 - **Next Page:** (Navigation button for next entry) --- This information is designed to assist students in understanding the process of making an adjusting journal entry for unrealized losses on investments. It is important to regularly assess investments and adjust their values to reflect fair market conditions accurately.
---

### Exercise 12-9 (Algo) Securities Available-for-Sale: Adjusting Entries; Financial Statement Effects [LO12-4]

Loreal-American Corporation purchased several marketable securities during 2024. At December 31, 2024, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2023, and all are considered securities available-for-sale.

#### Table: Marketable Securities Summary (as of December 31, 2024)

| Securities Type | Cost       | Fair Value | Unrealized Holding Gain (Loss) |
|-----------------|------------|------------|--------------------------------|
| **Short term:** |            |            |                                |
| Blair, Incorporated | $506,000   | $392,000   |    $(114,000)                  |
| ANC Corporation   | $463,000   | $506,000   |    $43,000                    |
| **Totals (Short Term)**    | $969,000   | $898,000   |    $(71,000)                   |
| **Long term:**  |            |            |                                |
| Drake Corporation   | $506,000   | $573,000   |    $67,000                    |
| Aaron Industries   | $707,000   | $673,000   |    $(34,000)                   |
| **Totals (Long Term)**     | $1,213,000 | $1,246,000 |    $33,000                    |

#### Required:
1. Prepare the appropriate adjusting entry at December 31, 2024.
2. What amount would be reported in the income statement at December 31, 2024, as a result of the adjusting entry?

#### Graph/Diagram Explanation: 
The table lists the securities purchased by Loreal-American Corporation, categorized under short-term and long-term holdings. For each security, the 'Cost' and 'Fair Value' are provided alongside the 'Unrealized Holding Gain (Loss)', which is calculated as the difference between the fair value and the cost. The totals for both the short-term and long-term securities are calculated, showing an overall gain or loss.

---

This exercise aims to help students understand the process of making adjusting entries for securities available-for-sale and the impact of these adjustments on financial statements.
Transcribed Image Text:--- ### Exercise 12-9 (Algo) Securities Available-for-Sale: Adjusting Entries; Financial Statement Effects [LO12-4] Loreal-American Corporation purchased several marketable securities during 2024. At December 31, 2024, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2023, and all are considered securities available-for-sale. #### Table: Marketable Securities Summary (as of December 31, 2024) | Securities Type | Cost | Fair Value | Unrealized Holding Gain (Loss) | |-----------------|------------|------------|--------------------------------| | **Short term:** | | | | | Blair, Incorporated | $506,000 | $392,000 | $(114,000) | | ANC Corporation | $463,000 | $506,000 | $43,000 | | **Totals (Short Term)** | $969,000 | $898,000 | $(71,000) | | **Long term:** | | | | | Drake Corporation | $506,000 | $573,000 | $67,000 | | Aaron Industries | $707,000 | $673,000 | $(34,000) | | **Totals (Long Term)** | $1,213,000 | $1,246,000 | $33,000 | #### Required: 1. Prepare the appropriate adjusting entry at December 31, 2024. 2. What amount would be reported in the income statement at December 31, 2024, as a result of the adjusting entry? #### Graph/Diagram Explanation: The table lists the securities purchased by Loreal-American Corporation, categorized under short-term and long-term holdings. For each security, the 'Cost' and 'Fair Value' are provided alongside the 'Unrealized Holding Gain (Loss)', which is calculated as the difference between the fair value and the cost. The totals for both the short-term and long-term securities are calculated, showing an overall gain or loss. --- This exercise aims to help students understand the process of making adjusting entries for securities available-for-sale and the impact of these adjustments on financial statements.
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