AccountingBrooks Company purchases debt investments as trading securities at a cost of$66,000 on December 27. This is its first and only purchase of such securities.At December 31, these securities had a fair value of $72,000.Brooks sells a portion of its trading securities (costing $3,000) for $4,000 cash.Analyze each transaction above by showing its effects on the accountingequation-specifically, identify the accounts and amounts (including + or -) foreach transaction. Fill in the blanks1.1.AssetsDebt(+)Investments increase- TradingCash2. Gain onsale of debtinvestments3. DebtInvestments- Trading3. Cash(-)decrease(+)increase(-)decrease(+)increaseLiabilities + Equity66,000 =66,000 =6,0003,0004,000===+++++(+)increaseF6,000

Trading securities or securities held fir sale means the securities which are intends to sale within…

Answered: Accounting Brooks Company purchases…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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