Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities available-for-sale. Cost Fair Value Unrealized Holding Gain (Loss
Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities available-for-sale. Cost Fair Value Unrealized Holding Gain (Loss
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Loreal-American Corporation purchased several marketable securities during 2021. At December 31, 2021, the company had the investments in bonds listed below. None was held at the last reporting date, December 31, 2020, and all are considered securities available-for-sale.
| Cost | Fair Value | Unrealized Holding Gain (Loss) |
||||||||||
| Short term: | ||||||||||||
| Blair, Inc. | $ | 480,000 | $ | 405,000 | $ | (75,000 | ) | |||||
| ANC Corporation | 450,000 | 480,000 | 30,000 | |||||||||
| Totals | $ | 930,000 | $ | 885,000 | $ | (45,000 | ) | |||||
| Long term: | ||||||||||||
| Drake Corporation | $ | 480,000 | $ | 560,000 | $ | 80,000 | ||||||
| Aaron Industries | 720,000 | 660,000 | (60,000 | ) | ||||||||
| Totals | $ | 1,200,000 | $ | 1,220,000 | $ | 20,000 | ||||||
Required:
1. Prepare appropriate
2. What amount would be reported in the income statement at December 31, 2021, as a result of the adjusting entry?
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